According to information published by the IRS, they mail millions of letters to taxpayers every year for many reasons. What could be worse than opening the mail to find a letter from Uncle Sam? Just breathe deeply, in and out, and open the letter. Read it carefully. Most letters from IRS are seeking information; however, a certified letter or a registered letter is much more serious. After the initial panic, open the letter, read its contents and call your CPA and, if necessary, call your attorney.
Seven simple suggestions
Don’t panic. Simply responding will take care of most IRS letters and notices.
Read the entire letter carefully. Most letters deal with a specific issue and provide specific instructions regarding what to do.
Compare it with your tax return. If a letter indicates a changed or corrected tax return, you should review the information and compare it with the original return.
Only reply if necessary. There is usually no need to reply to an IRS letter unless specifically instructed to do so. If the letter indicates a payment is due and you believe it to be in error, simply provide evidence of the payment or if you find the letter to be correct, just make a payment.
Respond timely. Bad news and distasteful activities often get worse with procrastination or by simply ignoring the obvious response. You should respond to a letter with which you do not agree. You should mail a letter explaining why you disagree. You should mail your response to the address listed at the bottom of the letter. Note that most IRS communications provide two addresses. One is for agreement and payment. The other is for information. You should include information and documents for the IRS to consider. You should allow at least 30 days for a response. When a specific date is listed in the letter, there are two main reasons why you should respond by that date: to minimize additional interest and penalty charges and to preserve appeal rights if you do not agree.
Don’t call. For most letters, there is no need to call the IRS or make an appointment at a taxpayer assistance center. If a call seems necessary, you can use the phone number in the upper right-hand corner of the letter. You should have a copy of the tax return and letter on hand when calling. Understand that the phoned agent may not respond to your call. There are various levels of responsibility in the IRS and most people you may contact, by phone, do not have the ability to change the circumstances presented in the letter.
Keep the letter. Always keep copies of any IRS letters or notices received, Keep them in your tax records. If there is a change in your tax return applicable to the current year’s filing, your tax preparer should be notified. If your tax preparer has an active power of attorney (POA) for your tax account, the IRS will notify the preparer when any correspondence is sent to you.
For more information, call Wilson & Wilson, PC, CPA, CFE at 615-673-1330 or email jim@ wilsonandwilsoncpa.com