Things to Remember When Communicating with the IRS
July 21, 2014
By Daniel Gibson, CPA
The Internal Revenue Service (IRS) sends millions of notices to taxpayers every year. Some notices alert taxpayers of unpaid or underpaid tax amounts as determined by the IRS. Others advise of overpaid amounts resulting in refunds or credits towards other liabilities. Yet others warn of impending collection actions by the IRS (e.g., liens or levies) for past failures to pay taxes, or even failures to file returns. Notices also alert taxpayers of rather simple and mundane corrections made by the IRS to filed tax returns to fix simple mathematical errors. Some letters or notices request supporting documentation for routine information reported on a return.
The common and even understandable first reactions bring forth confusion, denial, distress or even outright panic. Even worse, you might think that your tax professional did something wrong. Yikes!
Instead of reacting this way, you are better served by calmly reviewing and trying to understand the notice, and then responding directly to the correspondence in a timely fashion or immediately contacting your professional preparer to obtain assistance. To help you deal with these pieces of mail, here are some things you should know and consider with regard to IRS notices:
- First and most importantly, don’t ignore these notices. As a general rule, never let a notice go unanswered.
- When you receive a notice or letter from the IRS, immediately read it closely to see exactly what the notice or letter is saying or requesting. Each letter and notice generally will offer specific instructions on what you are asked to do to satisfy the inquiry.
- Don’t assume the worst. You are not necessarily in trouble or do not necessarily owe more money when you receive a notice from the IRS. As stated above, there are a number of reasons why the IRS might send you a notice. Not all of them are catastrophic.
- Don’t assume the notice is correct. If you receive a correction notice, you should review the correspondence and compare it with the information on your return.
- If you choose to handle the matter on your own without counsel or another authorized representative, you should send a written explanation of why you disagree with the notice and include any documents and information you want the IRS to consider, along with the bottom tear-off portion of the notice. Always be mindful of time deadlines listed in the notice for filing your response.
- The IRS advises taxpayers that most correspondence can be handled without calling or visiting an IRS office, and this generally is true. If you have questions, you can call the telephone number in the upper right-hand corner of the notice.
- Be aware of your rights as a taxpayer. Some notices request a taxpayer to bring additional information or records to a local IRS office and may request that the taxpayer appear and answer questions. Federal law requires that such notices be accompanied by IRS Publication 1 which includes a notice to the taxpayer of his or her rights to be represented before the IRS by an authorized representative.
- Always keep copies of any and all correspondence you send to or receive from the IRS (especially for future reference to help a tax professional that you might later hire to take over the matter for you). Furthermore, to protect you in case you receive contradictory or erroneous advice from an IRS representative, also keep a record of the names and identification numbers of every IRS agent you speak with on the phone with regard to the matter in the letter or notice. All IRS personnel are required to give you their name and identification number, and generally will offer it at the beginning of every phone call.
- When sending documents to the IRS, never send originals. Always send copies.
- The IRS never makes initial contact with a taxpayer via e-mail. Since these e-mails are always phony, you should never respond to them. You should also not open any attachments, since they might contain malware. Forward a suspicious e-mail to firstname.lastname@example.org.