Every year, the IRS sends millions of letters and notices to Taxpayers for a variety of reasons – collections, audits, requests for tax returns or additional information, tax refund matters, and more. It our experience here at Bryson Law Firm, LLC, in the weeks and months that follow the tax deadline (this year, as a result of the COVID-19 Pandemic, this Falls in late Summer), we see an influx of Taxpayers contact our office for assistance in response to these letters. Listed below are some “Dos” and “Don’ts” when it comes to how you should react to letters from the IRS.
Don’t ignore it. This is easy to do – we know. Particularly when it’s regarding an IRS issue that has been around for some time, it’s easy to push these notices to the side for “later.” Take our advice – tackle this now. Each letter sent by the IRS will be about a specific issue and will include specific instructions on how to deal with the issue. Many of these letters will provide deadlines. We encourage Taxpayers to do their best to ensure the matter at hand is addressed and addressed timely.
Don’t panic. We get it – a notice from the IRS is nothing to be excited about unless it’s a check. We have also seen firsthand just how big IRS issues can get, so we understand the urge to respond initially with panic. However, most of the time, all the Taxpayer needs to do is follow the instructions provided in the letter, so take comfort in knowing that there is a solution! If you are not comfortable addressing the matter alone, DON’T. Contact a Tax Professional like Bryson Law Firm, LLC to take the lead.
Don’t reply unless instructed to do so. Trust us on this one – sometimes, responding when a response is not requested is only going to complicate the situation by creating confusion for the IRS, which unfortunately often is at the Taxpayer’s detriment. There usually is not a need for Taxpayers to respond to letters from the IRS unless instructed to do so. However, Taxpayers who owe and are facing threatening action should formulate a Response Plan. We can help you determine your options, formulate a Case Plan, and execute on that plan through negotiations with the IRS; just head to brysonlawfirm.com to learn more and to initiate the Consultation process.
Do take timely action. An IRS notice may reference changes to an account with limited time to dispute the proposed changes, taxes owed with collections threatened, or a specific issue that requires Taxpayer clarification in order to process a tax return. Acting in a timely manner can ensure that the matter is resolved promptly. If it is in response to a pending refund, this means money in your pocket sooner rather than later, and in the case of balances due, will likely help to minimize potential penalties or late fees.
Do review the information. If a letter is about a proposed adjustment on a tax return, the Taxpayer should review the information provided by the IRS and compare it with the original return filed and with tax return records. If the Taxpayer agrees that the IRS proposal is correct, they should make notes about the corrections on their copy of the tax return and keep it for their records and consult with their Tax Professional about whether any responsive action should be taken. If the IRS proposal is incorrect, Taxpayers have limited time to dispute proposed adjustments before the additional taxes are assessed, so Taxpayers should formulate a Response Plan as soon as possible with their Tax Professional. This often requires preparing an in-depth response with supplemental information and documentation explaining why the Taxpayer does not agree. DO be patient once a response has been sent and allow at least 30 days for a response unless there is an urgency that requires immediate attention.
Do remember there is usually no need to call the IRS. If a Taxpayer must contact the IRS by phone, they should use the number in the upper right-hand corner of the notice to ensure their call is routed to the appropriate IRS office. Take our word on this one – calling the incorrect IRS number will lead to unnecessary wait times and serious frustration. Additionally, the Taxpayer should have all relevant information on hand such as copies of the notice received and the tax return at issue to ensure that after finally getting through to an IRS representative, they can have the most productive telephone call possible with the IRS. Know that your conversation with the IRS will be logged into your “account”. If Taxpayers are not comfortable communicating with the IRS on their own, they should consult with their Tax Professional and allow them to handle all IRS communications.
Do avoid scams. The IRS will NEVER contact Taxpayers by social media or by text message. The first contact from the IRS will typically come in the mail, but even then, misleading advertisements in response to Notice of Federal Tax Lien filings are often sent by those out-of-town tax relief companies that look a lot like official IRS correspondence. Taxpayers should be confident about the authenticity of an IRS letter, and consult with a Tax Professional if they have any doubts about exactly where they are sending sensitive information or money to. Taxpayers who are unsure if they owe money to the IRS can view their tax account information on the IRS website or have their Tax Professional perform an Account Analysis under the provisions of their IRS Form 2848 Power of Attorney Form.
If you need any help developing a plan of action in response to an IRS notice, we encourage you to contact Bryson Law Firm, LLC to discuss. Your initial consultation is free and confidential.