Receiving a tax notice from the Internal Revenue Service (IRS) or a state taxing agency can be stressful. Here are a few tips on how to deal with a notice.
If you are a current client – I do not charge to review a tax notice for current clients. Please upload a copy of every page of the notice to your client portal as soon as possible. If additional work is needed to deal with the notice, I will communicate with you about any potential fees before proceeding with work to resolve the notice. Do not pay any amounts requested by a taxing authority until I review the notice. Payment requests are often wrong.
If you are not a current client and want to deal with a tax notice on your own, here are recommended steps to take.
1. Read and Understand the Notice
The first step is to carefully read the tax notice you received. Pay close attention to the reason for the notice, any deadlines mentioned, and the specific actions required from you. Understanding the content of the notice will help you determine the appropriate next steps.
2. Don’t Panic
Receiving a tax notice can cause anxiety, but it’s important to remain calm. Many tax notices are routine and can be resolved with proper communication and documentation. Panicking will only add unnecessary stress to the situation.
3. Verify the Information
After reading the notice, cross-reference the information provided with your own records. Double-check the dates, figures, and other relevant details. Mistakes can happen, and it’s essential to ensure the accuracy of the IRS or state tax agency’s claims before proceeding.
4. Research the Issue
Take the time to research the specific tax issue mentioned in the notice. The IRS website (www.irs.gov) as well as state tax agency’s websites provide a wealth of information and resource, including publications, forms, and instructions. Educating yourself about the issue will help you make informed decisions about how to proceed.
5. Contact Your Tax Preparer or Advisor
If you work with a tax professional or advisor, reach out to them immediately after receiving the notice. They have experience dealing with these types of issues and can provide valuable guidance. Share the details of the notice with them, and they will be able to assist you in understanding your options and developing a strategy.
6. Respond within the Deadline
Most tax notices require a response within a specific timeframe. Failing to respond promptly can lead to additional penalties or legal actions. Make a note of the deadline mentioned in the notice and ensure you provide a timely response.
7. Gather Documentation and Evidence
Compile all relevant documents, receipts, and evidence that support your position. This might include income statements, bank statements, receipts, and any other records that validate your claims. Having well-organized documentation will help you present a strong case.
8. Draft a Clear and Concise Response
When responding to a tax notice, be clear and concise in your communication. Address the issues raised in the notice and provide the necessary information and documentation to support your claims. If you are unsure about how to draft an appropriate response, seek professional help.
9. Keep Copies of Everything
Make copies of all correspondence, documents, and forms you send to the IRS or state tax agency. It’s crucial to have a record of everything you submit for your own reference.
10. Submit your Response
For certain types of notices, you may be able submit your response online via the IRS or state tax agency’s website. Other types of notices require a paper response. When mailing information, I always recommend that you mail via the US Postal Service using certified mail with a return receipt. This provides proof of when you mailed your response as well as when it was received. This can be useful if there is a dispute in the future about when you provided the requested information.
11. Follow Up and Track Progress
After responding to the IRS, keep track of your correspondence and any communication from the agency. If the IRS requests additional information, provide it promptly. Following up will help you stay informed about the progress of your case.
It may take time and patience but you can usually resolve a tax notice by following the steps listed above. If you have received a tax notice and need help with how to respond, consider scheduling a free initial consultation call with me.