Have you received a letter in the mail from the IRS?
Be honest. Is there a letter (or a pile of them) in a drawer or under the rest of your mail that you have been avoiding?
While it is definitely alarming when you get a letter from the IRS it’s definitely not something that should be put off. The IRS could be contacting you for a variety of reasons – some of which have due dates. For the most part, the IRS usually sends letters because of an error on your tax return.
Many IRS notices that are sent to taxpayers are computer-generated. While they follow certain formats, they can be difficult to understand. The most common notices are “CP” notices. Each type of CP notice has a CP Number and a title. CP notices run the gamut but some of the most common include:
- Possible Identity Theft
- You qualify for a credit
- You have a balance due
- The IRS needs additional documentation
- There was a miscalculation or error on your return
- You owe a penalty
- There is an issue with direct deposit
You can research your notice on the IRS website here: “Understanding your IRS Notice or Letter”.
The first thing you should know about dealing with the IRS: procrastination and failure to adhere to IRS deadlines are not a good approach. When you receive a letter from the IRS, you should deal with it right away. The first thing to look for is the action the IRS needs you to take and the deadline you are given. The second thing you need to do is contact your tax preparer (us). We are far more familiar with IRS letters and notices than you are and can talk to the IRS on your behalf.
The IRS is not always right
Yep we said it. In many cases, a taxpayer will receive a notice proposing an adjustment in taxes because of some income that cannot be located on the tax return. Surprisingly, a number of taxpayers will assume the agency is correct and send in the requested additional tax, along with the penalty and interest assessments that accompany the letters, without question.
We deal with these situations on a regular basis and can tell you first hand the IRS makes mistakes. The IRS has been known to declare people diseased who are still living! It’s important that you and your tax preparer review the information thoroughly before forking over a payment to the IRS.
Oh you want to call the IRS?
Trying to call the IRS is very frustrating. Don’t expect to be able to talk to an employee. The IRS telephone system is designed to allow or force you to obtain information from a recorded message. The system certainly does not allow for quick or easy access to an IRS employee.
If you do get to speak to a person, take good notes on the information they give you and don’t leave the conversation with unanswered questions because it is rare that you will get to speak to the same person a second time. Also, don’t be surprised if the person on the other end is unhelpful. Don’t be afraid to ask for a supervisor if you can’t get the answers you need.
What if you owe money?
If you owe taxes, you want to make sure that you pay your bill as soon as you can or at least be proactive about it by setting up a payment plan, asking for an extension, or considering an Offer in Compromise. These are all things that a professional tax preparer can counsel you on or set-up on your behalf.
Here are some more tips: Six Tips for People Who Owe Taxes
Notice of an IRS Audit
AN IRS Audit is not something to take lightly. If you’ve received notice of an audit you should contact a tax professional to assist you. Even if you self-prepared, an Enrolled Agent will be able to represent you in front of the IRS whether they prepared your taxes or not.
Here are some tips for dealing with audits:
- Gather all relevant documentation on the issue being questioned.
- Make sure there is documentation to prove all deductions or items of income.
- Provide records to the auditor in an organized manner.
- Establish good rapport with the examiner.
- If the examiner turns out to be uncooperative, abusive or unfair, request a different one.
IRS letters are scary, but they should not be ignored! If you’ve got one lingering, get it out, open it up, and contact us today!