Friday, May 28, 2010

Don’t Panic! Things to Know If You Receive an IRS Notice

The Internal Revenue Service sends millions of letters and notices to taxpayers every year. Here are some things you should know about IRS notices – just in case one shows up in your mailbox.

First, don’t panic. Many of these letters can be dealt with simply and painlessly.

There are a number of reasons why the IRS might send you a notice. Notices may request payment of taxes, notify you of changes to your account, or request additional information. You may receive a notice if a W-2 or 1099 was issued to you, but you did not include the income on your tax return. The notice you receive normally covers a very specific issue about your account or tax return. Each letter and notice offers specific instructions on what you are asked to do to satisfy the inquiry.

If you receive a correction notice, you should review the correspondence and compare it with the information on your return. If you agree with the correction to your account, then usually no reply is necessary unless a payment is due or the notice directs otherwise.

If you do not agree with the correction the IRS made, it is important that you respond within the time limit specified on the letter. If you do not respond in a timely manner, you may lose some of your rights to appeal or contest the correction.

Often, a simple phone call is all that is needed.

But, most importantly, do not ignore the IRS. They will not go away just because you ignore them.

If you would like help responding to an IRS notice, contact me immediately for a free consultation on your options.