How to respond to an IRS notice

Authored by Kelley Kemper, CPA, Manager

If you receive a letter this year from the IRS, don’t be alarmed. Many of the letters or notices are routine, automatically generated, and can easily be resolved.  They typically fall into one of the following categories:

  • You have a balance due.
  • The IRS has a question about your 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 is a delay in processing.

The following are recommended guidelines how to address the letters or notices. 

Read

Each notice or letter contains a lot of valuable information, so it’s very important that you read it carefully. The IRS has a standard form letter for each type of tax problem, which will include a title, summary of the problem identified, tax year, notice date and employer identification number. There is also an identifier in the top corner of the notice/letter that is either a “CP” followed by a number (for a notice) or “LTR” followed by a number (for a letter).

  • Examples: CP161 refers to an “Unpaid Balance Due” or LTR 672C refers to a “Payment(s) Located and/or Applied.”
  • This identifier allows you to quickly identify the issue and your options for resolving it. If you’d like to do more research on your own, this is the identifier you should use in your search on the IRS’s website.

Respond

If your notice or letter requires a response by a specific date (typically it is 30 days), there are two  main reasons you’ll want to comply:

  • to minimize additional interest and penalty charges.
  • to preserve your appeal rights if you don’t agree.

Pay

If 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. Doing so will reduce the extra penalties and fees you may accrue from paying late.  You can make the payment on-line at https://www.irs.gov/payments.  Furthermore, there are payment options, such as payment plans or Offer in Compromise, listed on the IRS website if you can’t pay the full amount owed.  Either call the IRS or discuss with your tax professional about these payment arrangements.   

Copy

It’s important to keep a copy of all notices or letters with your tax records. You may need these documents later.

Communication

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.

Validate

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

If you have any questions regarding your IRS Notice/Letter or need assistance in responding to them, please contact us.

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