Got a letter from the IRS? We know it’s nerve-wracking. Receiving a letter from the Internal Revenue Service (IRS) can be incredibly daunting, especially if you know its intent. However, you should know that these correspondences are not always bad news. But, considering it’s bad news, don’t worry. You can take necessary steps to address the issue as well.
But, if it is about responding to general news, don’t worry, we have the right guidance for that too. And that’s what we will discuss with you today. But before that, ask yourself one genuine question, who is the IRS and why are they sending you a letter?
When does the IRS Send you a Letter?
Many people stumble asking one general question time and again, “I got a letter from IRS. Why?” The IRS may send you a letter for several reasons, regardless whether the news is good or bad! So, what exactly is the reason behind why they forwarded you a letter back at home?
Requesting Information from you: The IRS potentially wants more information regarding your tax return.
Any Notice of Changes or Corrections: The IRS might send a letter when trying to inform you of adjustments they have made to your tax return. It can be majorly due to errors found during processing or as a result of an audit. If you disagree with the results of an IRS audit, you can file for an audit reconsideration IRS to review the assessment and adjust your tax obligations.
Payment Request: In case you still owe some debt to the IRS, they will potentially send you a letter with a clear statement of the amount owed, the reasons for the debt, and how you can make a payment.
Refund Information: They can also send you a notice when informing about the refund status or if the amount was adjusted.
Verification of Identity: There are several cases where the IRS usually forwards a letter when they need to verify your identity to prevent any type of fraud. They can send a letter when requesting additional information to confirm it’s really you.
Audits: If your tax return has been selected for an audit, the IRS will notify you by mail.
So, What are the Steps You Should Take After Receiving a Letter from the IRS?
Taxpayers often get baffled after receiving a letter from the IRS. They generally keep asking:
- Why did the IRS send me a letter?
- Why am I getting mail from the IRS?
- Why did I get a notice from the IRS?
While there can be multiple reasons why, your primary focus should be understanding the content of the letter first.
1. Understanding the Letter
The first step you need to take is thoroughly going through the contents of the letter. The IRS correspondence is going to offer certain details about the issue. They will let you know the issue, like a simple request for additional details, a change notification, or a hint towards a serious matter, such as an audit or a notice of unpaid taxes.
The letter is going to refer to a specific tax form and tax your. This is going to explain why the IRS is contacting you.
2. Required Response
After you have gone through the letter, consider giving the IRS a response. However, in case the IRS is requesting additional information or amount, it’s very essential to respond promptly to avoid any potential penalties or additional interest.
Also make sure you get a copy of the letter and keep it with your tax records. If they ask you to submit documents, ensure you only forward them the copy and not the originals. This is because you might want to retain those for your own records.
3. Seeking Professional Help
Based on the seriousness of your tax situation and the IRS’s request, consider talking to a professional around the corner. A certified public accountant (CPA), enrolled agent (EA), or tax attorney who knows the tax law can help interpret the letter’s content and guide you on the best course of action.
Why is seeking help from IRS Tax Professionals important? Let’s give you an overview of why.
Experiencing dire tax debt, a taxpayer must get professional help to negotiate a payment plan with the IRS and avoid the severe consequences of IRS wage garnishment, which would directly take a portion of his earnings to settle his outstanding liability. At times like these, it becomes tough to navigate the process alone. Seeking help during times of crisis like these can alleviate stress, and minimize traumatic financial circumstances.
4. Responding to the IRS
After each step is followed, it’s time to respond to the IRS. And make sure you respond to it on time! Address all points raised in the letter, offer them all requested information, and if important, make the required payment.
If the IRS is correct in its assertion and you owe additional tax, pay the amount owed or begin the process of setting up a payment plan. However, if you don’t agree to it, respond to them with a detailed explanation and provide supporting documentation to state your case.
It’s important that you send your response via certified mail to have proof that the IRS received it.
5. Follow the Next Steps
Did you receive a letter from IRS? And have you responded to it? Once you have responded to the IRS, expect a response within a timespan of 30 days.
However, it could take longer on the basis of how complex the issue is. This is where it’s necessary that you keep correspondence with the IRS.
If there is a rise of a serious issue or an audit, be prepared for potential back-and-forth communication with the IRS until the matter is resolved.
6. Take Steps to Prevent Future Problems
Getting a letter from the IRS can instill fear in many. The best way to prevent future issues with the IRS is to file accurate and complete tax returns every year. It’s important to keep to-the-point records, report your income and deductions accurately, and file and pay your taxes on time.
Staying organized with your financial records can make responding to future IRS letters easier and less stressful. In addition, regularly consulting with a tax professional can help ensure you’re complying with all tax laws and minimizing potential issues with the IRS.
At times when navigating the issues that comes with an IRS letter becomes difficult, choose discussing your issues with expert IRS tax professionals!
It is true that receiving an IRS letter can be intimidating. But, it is important to remember that not every letter the IRS sends is going to break the bad news. Remember, proactive measures and timely action can already diminish the risks that might come with IRS letters. So, never hesitate and get immediate help from tax agent services!