Don’t Panic: Understand Why the IRS Is Contacting You
First things first, not every letter from the IRS means you’re in trouble. There are many reasons the IRS might reach out, and often, it’s about a minor issue that needs clarification or correction. A letter from the IRS usually includes a comprehensive description of specific issues and information to help taxpayers follow up accordingly. Some of the most common reasons you may get mail from the IRS include:
- A minor error on your tax return
- A request for additional information
- A notice about a balance due
- Notification of a refund adjustment
- Verification of your identity
- Notification of an audit
The key is to read the letter carefully and follow the instructions provided. In most cases, quick action can resolve the issue without much hassle. If you feel like you need IRS representation, partnering with a professional tax consultant is recommended.
9 Things to Do If You Receive a Letter from the Internal Revenue Service
If you receive an IRS notice, you will need to take action. Rather than start worrying about getting thrown into jail for tax fraud you didn’t even realize you committed, stay calm and work through the following list.
1. Check Which Type of IRS Letter or Notice You Receive
The IRS sends different types of notices depending on the situation. So, take the time to first check which type of letter you’ve been sent. If you got a letter or notice, there will be a specific number (usually listed at the upper right or bottom right-hand corner). This number clarifies the purpose of the notice and will provide you with more information on the next steps. Some common examples include:
- CP01A: This provides a 6-digit Identity Protection Personal Identification Number (IP PIN) to help prevent misuse of Social Security numbers. You may need this for your IRS online account.
- CP11: Notifies you that the IRS believes there was a miscalculation and that taxes owed are higher than reported.
- CP12: This letter states that the IRS changed a taxpayer’s tax return due to a miscalculation, which will result in a refund or a change in the original amount.
- CP14: Notifies you that you owe a balance on unpaid taxes.
- CP59: This is a letter stating that a taxpayer has not filed the tax return from the prior year or that the IRS has no record of it being filed.
- CP501 or CP503: This is usually just a casual reminder of an outstanding balance you owe to the IRS.
- CP3219A (Statutory Notice of Deficiency): Indicates that the IRS is proposing additional taxes, and you have the right to dispute it in Tax Court.
- Letter 4883C: Requests that you verify your identity before your state or federal tax return can be processed.
- Notice of Audit/Examination: This document informs you that your return is being audited and outlines what documents you’ll need to provide.
Taking swift action could minimize additional interest and penalty charges, so if you agree with the information, it’s best to resolve things as soon as possible. You can find detailed information on each letter by searching the identification number here.
2. Read the Letter Carefully
Before taking any action, read the letter thoroughly from beginning to end. Pay attention to:
- What the letter says: What is the IRS asking you to do?
- The tax year involved: Is this about your most recent return or a previous one?
- The deadline: When do you need to respond?
IRS letters typically include clear instructions in the notice. If you’re unsure about anything, it’s a good idea to contact a tax professional for guidance.
3. Verify That the Notice or Letter Is Legitimate
Unfortunately, tax scams are common, and criminals often impersonate the IRS to trick people into giving out sensitive information. Here’s how you can tell if a letter is genuinely from the IRS:
- The IRS typically initiates contact via mail, not phone calls, emails, or text messages.
- Real IRS letters are printed on official letterhead and include your full name, part of your Social Security number, and specific tax information.
- The letter will also include a notice (CP or Letter) number you can verify on the IRS official website.
If you suspect a letter might be a scam, call the IRS directly at 1-800-829-1040 to confirm its authenticity.
4. Respond Promptly if Required
If the letter asks for a response, don’t delay. Failing to respond by the stated deadline could result in additional penalties, interest, or loss of your rights to dispute an issue. Since each notice deals with a specific issue, you may need to do one or more of the following things:
- Send supporting documents
- Make a payment
- Correct information
- Confirm your identity
Follow the instructions carefully. You should review your tax records prior to responding and make sure that you have everything you need to support the claim. Unless you would like to dispute the contents of a letter, you can often resolve issues simply by mailing back the requested documents or responding online.
5. Correct Errors if Necessary
You may need to correct the error if you discover that you made a mistake on your return and agree with the IRS’s findings. Sometimes, the IRS will correct simple math errors automatically. Other times, you may need to file an amended return using Form 1040-X. Always follow the specific instructions in the letter, and keep copies of everything you send.
6. Dispute the IRS’s Findings (If You Disagree)
If you believe the IRS made a mistake, you have the right to dispute it. You’ll need to prepare a written reply stating why you disagree and include any supporting documentation. You should send your response to the address listed on the letter and must do so before the deadline provided. If you need to ask a question about the dispute before submitting it, it’s best to partner with a tax professional.
7. Pay What You Owe (If Applicable)
If the IRS letter shows that you owe additional taxes, paying as soon as possible is best to minimize penalties and interest. Take the time to compare the discrepancies of your original tax return and keep a copy of the updated one for your records. You can typically pay online via the IRS Direct Pay system, pay by check or money order through mail, or set up an installment agreement. Always include your notice number and the tax year on any payment you send, and keep a personal copy of everything for your records.
8. Seek Professional Help If Needed
Navigating IRS notices can feel overwhelming, especially if you’re facing an audit, owe a significant amount of money, or believe the IRS made a significant error. If you receive a notice and aren’t quite sure what to do, find a certified public accountant (CPA) or tax attorney to help. A qualified tax professional can communicate with the IRS on your behalf, help you understand your options, and protect your rights throughout the process.
9. Keep Copies of All Correspondence
Finally, make sure you keep copies of every letter you receive and send, any proof of mailing, and any other important documents for a minimum of three years from the date you received them. Maintaining detailed records can be critical if you need to reference the issue later or if a dispute escalates.
Questions Regarding IRS Letters or Tax Tips?
Receiving a letter from the IRS can be nerve-wracking, but it doesn’t have to ruin your day. Most IRS letters are straightforward and can be resolved quickly with prompt, careful attention.
At Del Real Tax Group, we’re always here to help you navigate IRS communications and protect your peace of mind. If you have questions about an IRS notice or need expert assistance, don’t hesitate to contact us. We’re happy to help you find a solution!
