Received a Notice From the IRS?
An unexpected letter from the IRS can be alarming, but it doesn't have to be a crisis. This guide outlines a clear, step-by-step approach to help you understand the notice, protect your rights, and resolve the issue effectively.
Rule #1: Don't Panic
Millions of notices are sent out each year, often for routine matters like math errors or information mismatches. A notice is not automatically an audit or a sign of serious trouble. Approach it calmly and methodically.
Rule #2: Don't Ignore It
Ignoring an IRS notice will only make the situation worse. It can lead to additional penalties, interest, and more aggressive collection actions. Timely action is key to a favorable resolution.
Your 5-Step Action Plan
Analyze the Notice
Read the entire notice carefully. Identify the notice number (e.g., CP2000, CP14), the tax year in question, and most importantly, the response deadline. The notice will explain why the IRS is contacting you and what information they need.
Gather Your Documents
Collect the tax return for the year mentioned in the notice, along with all supporting documents. This includes W-2s, 1099s, receipts, bank statements, and any other records that support the figures you reported.
Determine Your Response
Compare the information in the notice with your records. Do you agree with the IRS's proposed changes? Do you disagree? Or do you need more information to be sure? Your conclusion will dictate your next steps.
Respond Promptly & Properly
Always respond in writing by the deadline, even if you need more time. Send your response via certified mail with a return receipt to have proof of delivery. Clearly explain your position and include copies (never originals) of any supporting documents.
Consider Professional Help
For complex issues or significant amounts, consulting a tax professional is a wise investment. They can communicate with the IRS on your behalf, ensure your rights are protected, and navigate the procedural complexities.
Understanding Common IRS Notices
Unreported Income (CP2000)
The most common notice. The IRS has income information from an employer or bank that doesn't appear on your tax return.
Balance Due (CP14)
A straightforward notice indicating you have a balance due on your taxes for a specific year.
Math Error
The IRS corrected a mathematical mistake on your return, which may result in a change to your refund or balance due.
Audit Notification
The IRS has selected your return for a more detailed examination (audit). It is highly advisable to seek professional help immediately.
When You Need an Experienced Tax Attorney
While you can handle some minor notices on your own, certain situations require professional legal representation to protect your interests. You should call an attorney if:
- You disagree with the IRS's findings.
- The amount in question is significant.
- You have been notified of an audit.
- You cannot afford to pay the amount the IRS claims you owe.