Received an IRS Notice? Here’s What to Do Next

Getting a letter from the IRS can make your stomach drop a little. Most people see that envelope and immediately think they’re in trouble or assume they’re being audited. That’s usually not the case.

The IRS sends notices for all kinds of reasons. Sometimes there’s a difference between the income reported on your tax return and information the IRS received. Other times they may be looking for additional documentation, notifying you of a balance, questioning a credit or deduction, or making an adjustment to a previous return.

Whatever the reason, the first thing I tell people is: don’t ignore it, but don’t panic either.

Take the time to read the entire notice and make sure you understand what the IRS is actually saying. Look at the tax year involved, the amount they say you owe, why they believe an adjustment is necessary, and most importantly, the date by which they expect a response.

And remember, just because the IRS says you owe additional money doesn’t necessarily mean they’re correct.

Before you send a payment or agree to a change, compare the notice with your tax return and your records. There may be documentation that clears up the issue, or the discrepancy may be something that can be explained. Responding too quickly without understanding what happened can sometimes make an otherwise manageable situation more complicated.

The other mistake I see is waiting too long. An IRS notice sitting unopened on the kitchen counter isn’t going to disappear. There are usually specific deadlines for responding, and missing them can limit your options or lead to additional penalties and interest.

If you understand the notice and know exactly what the IRS needs, you may be able to handle a simple matter yourself. But if the notice involves a larger balance, income discrepancies, multiple tax years, an examination of your return, or something you simply don’t understand, that’s when getting professional help can make a big difference.

As an Enrolled Agent, I can communicate with the IRS on behalf of my clients when appropriate, review what they’re requesting, help determine whether their position is correct, and work through the next steps with you. You don’t have to try to figure out complicated IRS correspondence on your own.

One last thing: be cautious if you receive an unexpected text message, email, or phone call claiming to be from the IRS. Scammers know that mentioning the IRS gets people’s attention. If something doesn’t seem right, don’t provide personal or financial information until you’ve verified that the communication is legitimate.

If you’ve received an IRS notice and aren’t sure what it means or what you should do next, bring it to us. At TaxPointe, we’ll help you understand what you’re dealing with and determine the best way to respond.

Sometimes that IRS envelope is a relatively simple issue. Sometimes it needs more attention. Either way, it’s much better to know what you’re dealing with than to spend weeks worrying about it.