There are three scenarios that will cause the IRS to send a notice. All of them involve issues over how much a person has paid and how much the IRS thinks they should have paid.
Handling these situations the right way will make the problem go away relatively easily for the average taxpayer. On the other hand, handling it the wrong way can be a nightmare.
The three scenarios that will cause the IRS to send a notice to a taxpayer are:
- If a taxpayer couldn't afford to pay all of their taxes back in April, the IRS will send them a bill for the balance.
- If a taxpayer thinks they paid enough, but the IRS disagrees and believes they should have paid more, they'll receive a 'Notice of Proposed Adjustments'.
- If the IRS feels that a taxpayer needs to justify something they claimed on their return, they'll send a Notice of an Audit.
Nobody likes to receive a notice in the mail from the IRS. However, if you do find yourself holding one, there is a right way and a wrong way to handle these situations.
First of all, don't panic! These situations can be worked out equitably. If you're in a financial bind and the IRS is just adding to your problems, your situation can be worked out. Although the IRS is serious about getting their money, they realize that not everybody can just write a check and take care of everything.
Even if you don't think that you can afford to pay the bill, the worst thing you can do is to ignore the situation and hope that it will go away. It won't. The notices will keep coming and they will get nastier as time goes by.
Taxpayers that find themselves in this situation have the right to hire an attorney. They will typically take over all dealings with the IRS on behalf of the taxpayer from that point.
Often times an attorney will be able to negotiate a livable payment plan or even a settlement for less than what is owed.