The IRS sends out thousands of notices each year so if you got one or get one, you are not alone. Even I got a notice this year! So don’t panic and immediately think there is a problem. However, you should never ignore your IRS notice. I’m going to give some tips on what you should do if you get a notice.
TIP: The IRS will NEVER contact you via phone. They will always send a notice. If you get a phone call from someone “from the IRS” saying that your return is incorrect and you owe more money, immediately hang up. Never give that person your information. You could also report these instances to the IRS so they are aware, and they can inform other people of these fraud scams.
The first thing you should do is read the entire notice. The IRS is not known for writing notices in “layman” terms so don’t be intimidated. If the notice makes absolutely no sense to you, you can Google the notice number that is in the upper right hand corner of your notice. Click here to see the different types of notices. Doing this can usually lead you to common questions regarding this notice that may help you decide what you need to do. You need to determine if there is action that needs to be taken or if they are simply notifying you of a situation which will cause some sort of delay with your tax return. For instance, you could get a notice saying you owe more tax than you thought which requires action (we’ll discuss below), or you could get a notice saying your return is being reviewed and you simply have to wait for their findings or your refund. For instance, the notice I received told me that my return was being “reviewed”, and I have to wait 60 more days to receive my refund. Why could this be? This is probably due to the fact that I filed my return very early. The IRS matches the information you file in your return with information they receive. The IRS receives copies of your W-2s, 1099s, etc. so if you file your return before they get their copies of your information, they may hold your return in order to verify your information. So in this situation, no action is needed and all you can do is wait. There have been many fraud issues this year of people claiming other people’s refunds so the IRS also may be taking extra precautions. You can also go on the IRS website to verify your identity to help avoid complications.
If no action is required, simply keep the notice for your files. If action is required, you should still copy the notice for your files so you have proof in case your letter is lost in the mail when sending something back to the IRS. If your notice states that you owe more tax than your tax return stated, the notice will show the income and other items you filed on your tax return, and then the numbers that the IRS has in their records. Then it will show the increase in tax and the additional amount you need to pay. If you agree with the notice, you simply sign the form and enclose your payment. ALWAYS copy the front and back of your payment before you send it to the IRS, and you should always send these payments “certified” through the post office. If you disagree with the changes they have made, you can send a copy of your notice back to the IRS with attached, signed documentation of why you do not agree with the notice. After that, you’ll receive a response from the IRS and you can go from there. Never ignore the notice even if you disagree because the IRS can add penalties and interest to your payment the longer it goes without being dealt with.
It is also possible to receive an IRS notice asking for payment when you have already made the payment in question. Sometimes it takes the IRS time to catch up so simply send a copy of the front and back of the check that you already sent (you should have made copies before you sent it the first time!) and you can send that to the IRS with a copy of the notice.
Lastly, if you have a CPA you can simply bring the notice to him or her so he or she can deal with it if you are not sure how to handle it.
If you have a notice that you don’t know how to handle, feel free to comment below so I can help you out!