Did You Receive an IRS Notice?
Time is NOT on Your Side
Every year, taxpayers receive notices from the IRS. Notices can be simple requests for more information or notification that you made a small math error that they have corrected. Sometimes, however, they want to audit specific items, deductions and even multiple years. Whatever the IRS requests, it is important to understand two things: their requests are not to be ignored, and time is almost never on your side. The third second thing to understand: Ignoring the IRS is done at your own peril.
When it comes to communicating with the IRS, many people decide to use a professional as their go between in negotiating with the taxing authority. Have representation provides specific benefits to you, including:
- A buffer between you and the authority during the process
- Preventing you from disclosing too much information they didn’t request that could prompt further inquiry
- Having a professional with a history of working with the IRS on your side
- The ability to discover the real reason for the inquiry—and how best to respond
- Having a negotiator with knowledge of the code and no emotional attachment to the issue.
The last point is especially important to remember. Not all government employees have a complete understanding of the 70,000-plus pages of tax code, and sometimes they get things wrong. In addition, some employees may not be up to date on case law challenges in tax court impacting the way a tax return has claimed an exemption, deduction or credit.
Most IRS inquiries are relatively simple to resolve, however if you have certain deficiencies, the resolution may be more complex, for example:
- Non-filing a return for one or several years
- Statements with Taxes due that have gone un-responded
- Letters threatening wage garnishment or a tax lien
- Audit notification notices
- Threats to levy bank accounts.
When dealing with the issues above, it is important to talk to your professional immediately to review your available resources, possible resolution scenarios, and additional information that you may have may offer a positive impact on the amount owed.
Communication is always the key. Quite often, after communicating with the IRS, the items in question can be clarified without penalty and sometimes with no additional amount owed or even a credit to the taxpayer. According to the IRS, most common notices are to notify you that your return has been adjusted and your refund is smaller or larger than anticipated, or that the return has been amended by the IRS (typically due to a math error) , or they require additional information about the return. Sometimes they merely need to verify information.
What to Do With an IRS Notice
First and foremost, read your notice carefully, and be sure to keep the notice in a safe place. If it requires a response, reach out to your professional for advice. Timely responses can avoid additional penalties and interest. More importantly, some remedies have a time limit for response. So, if you need to appeal, your rights may be limited if your timeline has lapsed.
Fear often keeps us from responding to the IRS until it is too late. If you receive a notice and you know it is incorrect, be sure to act promptly to protect your rights. And if you know you owe money but don’t have it in hand, try paying whatever you can as soon as possible. While not the most favorable terms, the IRS is almost always willing to accept partial payment and establish payment plans with taxpayers. You can always pay off the balance as soon as you can, but ignoring an IRS payment is a recipe for costly headaches coming to your mailbox very soon.
Need a helping hand? Our no-charge 30-minute consultation is a great opportunity for us to be introduced, learn about your issues and make preliminary recommendations for moving ahead.