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8 Things to Know About an IRS Notice

Tax Planning Taxes
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If you receive a letter this year from the IRS, don’t be alarmed. After every tax season, the agency sends out a variety of notices to taxpayers. Not every letter means there’s an impending audit coming your way. 

Many of the notices are routine and can easily be resolved. Here’s what to do if one shows up in your mailbox.

1. Stay calm.

Before your heart starts racing, remember that not all IRS letters are delivering bad news. In fact, the large majority can be taken care of fairly quickly and painlessly. You often only need to respond to take care of a notice.

2. The IRS sends letters for all sorts of reasons.

Any notice you receive from the IRS could be about a number of different topics regarding your account or your federal tax return. For instance, the letter could mention any of the following:

  • you have a balance due
  • the IRS has a question about your tax return
  • something on your return was changed
  • you are due a larger or smaller refund
  • you need to verify your identity
  • additional information is requested
  • there’s a delay in return processing

Sometimes letters can wind up being quite lengthy because they also must inform you of your rights and other information required by law. If you need help understanding the letter, contact a tax professional or call the IRS to ask questions.

3. It could be a change or correction.

You may get a notice that states the IRS has made a change or correction to your tax return. If you do, review the information and compare it with your original return.

4. There are specific instructions.

Each notice should state explicit instructions on what you need to do. As long as you follow them, you likely can take care of the request rather quickly.

Most importantly, do not ignore it! Don’t shove the letter to the side thinking you’ll take care of it later. Many of the instructions within those letters include a due date, so it’s important to take care of it right away. If you procrastinate, another letter will arrive in your mailbox not long after.

5. You shouldn’t have to visit the IRS.

Thankfully, most notices don’t require a call or visit to an IRS office. If you do have questions, however, you can call the phone number located in the upper right-hand corner of the notice. When you call, make sure to have your tax return and the notice in front of you so you can easily refer to specific information and answer any questions the IRS agent may ask.

6. You can agree or disagree with the notice.

Many letters from the IRS will require a response by a specific date. It’s important to comply with that date to minimize additional interest and penalty charges and to preserve your appeal rights if you don’t agree with what’s stated in the notice.

If you agree with the notice, you typically won’t need to reply unless other instructions are listed or you need to make a payment. Follow whatever instructions are given.

If you do not agree with the notice, you will need to respond by writing a letter explaining why you disagree. Within your letter, include any information and documents that support your claim. Mail your reply to the address shown in the upper left-hand corner with the bottom tear-off portion of the notice. Keep in mind, it can take up to 30 days to get a response back from the agency.

In the event that you owe money, always pay as much as you can right away. Even if you can’t pay the full amount, it’s better to send in some money than none at all. Doing so will reduce the extra penalties and fees you may accrue from paying late.

7. Keep a copy.

It’s in your best interest to keep copies of any notices you receive from the IRS with your other tax records. It may be a small chance you have to refer back to it, but it’s better to have a concrete paper trail of the occurrence than nothing at all.

8. All notices come by snail mail.

The IRS always sends letters and notices by mail. They will not contact you by email or social media to ask for personal or financial information. If you are ever contacted by someone via phone, email or social media who claim they are the IRS, immediately discontinue the conversation and call the IRS directly to ask if they are trying to reach you.

Suspicious letters

Even though the IRS only communicates via paper letters, that doesn’t mean you couldn’t wind up receiving a fake notice. If any letter you receive seems suspicious, always contact the IRS to check its validity before you do anything else.

You can report fraudulent letters by visiting the IRS’ Report Phishing page or calling 800-829-1040.

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