You sent off your tax return last month, expecting to be done filing taxes. But what do you do when you receive a letter back from the IRS? Don’t panic. Often, communication from the IRS can be resolved quickly.
However, there are some people who don’t even open mail from the IRS. They are so afraid that the letters sit there, gathering dust, sometimes for years. What’s the end result? Bad things—bank accounts cleared out, wage levies, or even the IRS emptying out your home.
I said “don’t panic”—yet, I’m also saying that terrible things can happen? Bad things generally happen only to people who don’t open their mail. Not you. When you receive a letter from any taxing agency, open it immediately. Correspondence from tax agencies is time-sensitive. Responding within the time frame specified in the letter gives you options. For this reason, if you’re a frequent traveler, have a friend, family member, or employee monitor your mail while you’re gone and open any letter that may arrive from such an agency.
Understand the letter from the IRS
If you don’t understand the letter you have received, have someone help you. If you’re already working with a tax professional, fax (or scan and transmit) a copy to him or her, immediately, and ask for an interpretation.
On your own? The IRS website provides a list of the codes that may appear in the top-right corner of your letter. These codes will help to explain the letter’s purpose. Click on the appropriate code on the IRS site for instructions on what to do next.
You’d rather call the IRS? Go ahead and call the phone number on the notice. (Tip: Call in the middle of the week, either early in the morning or in the early afternoon.)
When you reach someone on the phone, ask for that person’s name (ask him or her to spell it) and employee badge number. Write down the date and time of the conversation. Be prepared to identify yourself with your name, Social Security Number, date of birth, and info from the relevant tax return, so have that all handy.
Be polite. Don’t be angry. The person with whom you are speaking didn’t cause the problem, but he or she might be able to solve it. If not, perhaps that person can tell you who can. If you speak to someone who is rude or hostile, request a supervisor. If the person hangs up on you, well, you got a name and employee number at the beginning, right? File a complaint with the TIGTA (Treasury Inspector General for Tax Administration). And call again—you’ll get someone else who just might help you!
Solve the problem
Most issues are easy to solve. For example, the letter may report a math error. In that case, there’s nothing to do.
If the letter says you omitted something from the return, carefully review the information the IRS has provided. If the IRS is right, pay the bill. But do not sign the letter agreeing to anything because the IRS is often wrong. The information may be somewhere on your tax return, but the computer couldn’t find it. Or the 1099 may be a duplicate or in error. In any of these cases, write a brief, clear explanation of the error. Provide copies of proof, if available, and ask the IRS to cancel the proposed assessment.
If you get a levy notice, you’ve waited too long and ignored too many notices. However, even this can be fixed. At this point, though, you may need professional help. You can find an Enrolled Agent through the National Association of Enrolled Agents website. You can also find a CPA via your state society’s website or the CPA directory.
Eva Rosenberg, EA, is the publisher of TaxMama.com®, where your tax questions are answered. She teaches tax professionals how to represent you when you have tax problems. She is the author of several books and e-books, including Small Business Taxes Made Easy. Follow her on Twitter: @TaxMama