Dealing With IRS Notices

Dealing With IRS Notices
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In the past, the first thing I'd tell you about IRS notices would be "don't panic." These days, while staying calm is still important, the first thing you need to do is make sure the notice is authentic and is really from the IRS. There are so many scams involving taxpayers information that in the past week at least seven #IRS tweets warned of scams ranging from phishing for payroll information to scammers trying to collect "past due taxes."

The IRS sends millions of notices and letters for many different reasons. However, all IRS correspondence has specific instructions, so stay calm and read the information carefully to find out why you are being contacted. In many cases, the IRS is simply notifying you of a change to your account based on information they received. Remember, just because IRS sent you a notice or letter regarding your tax return it doesn't automatically mean the notice is correct or the taxes, penalties and interest are really due, they may only need an additional piece of information for clarification.

Moreover, no matter what information they need to help clear up the issue, they aren't going to call you screaming about money owed or knock on your door and threaten you. The same goes for email; the IRS does not send taxpayers emails asking for money - EVER. The IRS might return a phone call placed to them, but for IRS notices and assessments, the general rule for how the IRS contacts taxpayers is good old-fashioned snail mail.

If you are contacted and you used a tax pro, check with them about handling the notice. Many professionals include helping you deal with a notice, and in some cases even audits, as part of the fees you already paid. Not having to go it alone if the IRS has questions about your tax return is just one of the benefits of using a professional.

If you prepared your own return with tax preparation software, understand that there is often more opportunity for errors because the software cannot examine your paperwork and confirm that you are entering data in the appropriate place. For that matter, DIY tax preparation software may not prompt you with probing questions because it recognizes a potential deduction based on other information and in turn cause you to leave money on the table. Take the time to compare the information in the notice with your original return and if you agree with the IRS simply check the box that you agree and mail the notice back in the envelope provided. Don't forget to include any additional taxes, penalty, and interest calculated in the letter. You can send payments or visit IRS.gov/payments or use the IRS2Go app to make a secure payment with Direct Pay free. You can also pay with a debit or credit card through an approved payment processor for a fee. If you are unable to pay the full balance, pay as much as you can and consider requesting an Installment Agreement by completing IRS Form 9465. If you are nervous about handling the notice and want to make sure to proceed correctly, this is the perfect time to develop a relationship with a tax pro; reputable tax preparers have office hours and will meet with you to talk about the notice and help you determine what steps to take next.

The IRS has a Webpage, "Understanding Your IRS Notice or Letter" with basic steps outlining what you need to do. Dealing with the IRS can be scary, there is no reason to take it all on yourself, find a good tax pro, and use this opportunity to start next year with an expert in your corner. The right tax pro will help you stay out of hot water with the IRS and keep more of your money in your pocket!

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