What happens when you ignore IRS notices
Okay, you did it. You ignored the IRS notice. And maybe another notice. Perhaps a third? Maybe you forgot. Or perhaps you panicked and just didn’t know what to do. Whatever the reason, be certain the IRS will not just forget about you.
The IRS sends out millions of notices each year. Most IRS notices are notifications regarding math errors that have resulted in you either owing additional tax, or perhaps earning an unanticipated refund. On the other hand, the letter may be a request for additional information, such as a copy of a 1099, or some other form that may be required to confirm your return is correct.
You may be thinking, if I just ignore this notice, the IRS may just forget about this notice. Not a chance.
The good news is that some notices are just informational. If you receive a notice and there are no other instructions to contact the IRS, there may be no need to respond to the notice. If you happen to disagree with the information—even if no response is required—the IRS gives you 30 days to contact them. After that, whatever was decided is the final word.
On the other hand if you have ignored a notice that required a response, you will have several chances (between 4 and 5, according to the agency) to respond before the IRS takes more decisive action. After the first notice is ignored, you may receive what they refer to as a 90-day notice. At this point, the IRS has assessed the taxes due and may tack on additional penalties. To respond, you will need to send a response to the Tax Court for a remedy. If you ignore that notice, the IRS’s decision will be final and collection of tax and penalties will be demanded. Penalties and interest may also accrue with time.
Sometimes, the IRS will send a notice to schedule an office audit. This is an in-person meeting with an IRS representative to review one or several issues on your return. Again, if you fail to respond in time, they will issue a 90-day notice which, if ignored, will set in motion an aggressive collection process. Penalties will be assessed, and if ignored, collection efforts may result in the issuance of a Federal tax lien, a wage garnishment, and other levies.
The most intrusive IRS audit is a field audit. This privilege is usually reserved for higher net-worth taxpayers and can be triggered by a number of factors, from specific financial activities, or specific holdings (such as crypto currency trading) or other simply a review of deposits and other financial assets being reported on your return. If you ignore a field audit, you will open yourself up to the IRS agent having the right to examine all of your financial activities on your return. Things can get ugly quickly.
The best solution is to contact a tax professional as soon as possible to review your situation, develop a strategy, and represent you in front of the IRS. If for no other reason, a tax professional will be able to keep an even keel on emotions when responses require composure.
If you have been ignoring an IRS notice, you should act quickly to resolve the issue with the IRS. For professional advice and assistance, feel free to contact a ZMC tax professional to discuss your next steps.
If you are still within your 90-day response window and need to make a payment, try contacting IRS.gov/payments or use the IRS2Go app to pay with Direct Pay for free. You can also use a debit or credit card through an approved payment processor for a fee to pay your tax bill.
More information about IRS notices is available by visiting the IRS website and reading the IRS Publication 594, called The IRS Collection Process. If you want to learn more about penalties and interest the IRS may levy, look for IRS Publication 17, Your Federal Income Tax.
On the other hand, if all of this gives you cold chills, feel free to contact our offices for a confidential, no-obligation consultation about your situation and what we might be able to do to remedy your issue.