It’s no secret that the U.S. tax system is complicated and confusing to the average taxpayer. This is why, every day, thousands of taxpayers open their mailboxes to find the much-dreaded IRS Notice.
You’ve received a notice from the IRS; What to do next?
First, don’t panic. Second, contact your trusted tax attorney for guidance. In the meantime, consider some of the most common pieces of advice we extend to clients regarding responding to a tax notice.
Make sure the notice is legitimate
The IRS may be one of the most impersonated organizations in the history of fraudsters, thieves and con men. At some point, everybody gets a suspicious piece of mail or a strange phone call asking for their personal information, or to remit payment somewhere for “tax issues.” Before you do anything, examine the document closely; better yet, let your tax attorney take a look. If you suspect this might be fraud, you may also consult the Consumer Financial Protection Bureau, or your jurisdiction’s government agency that handles fraud and scams.
Is the IRS expecting payment?
Remember, not all notices are doom and gloom. Many of our clients receive notices for simple errors such as a typo on a return, or for a filing that was just a little late. In many cases, your notice is just informational, and no penalties are being assessed against you. In some cases, you may just need to amend a previous filing.
On the other hand, if the IRS states you owe tax, it’s important to consult your tax advocate as soon as possible. Penalties and interest can accrue rapidly, and you are often expected to pay the assessed tax even as your case is being resolved. This makes a timely response very important.
Don’t put it off
IRS deadlines can be firm, and the ability to secure an extension for a certain tax matter isn’t always guaranteed. It’s important to consult a tax professional, and plan to respond to the notice as soon as possible. Failure to do so may mean missing important deadlines or losing out on opportunities to favorably address the issue.
Even if the response deadline has passed, it probably isn’t too late
Many IRS actions can be reversed, and it is possible to appeal previous determinations in many cases. Even if you’ve missed a deadline, your tax attorney will likely have a wealth of options for addressing the issue at hand.
Most importantly, remember that receiving an IRS notice is common, and rarely the end of the world. In any event, your tax attorney will be a precious ally as you determine what to do next.