Every year the IRS sends millions of postal letters and notices to taxpayers (the IRS will never contact you by email). In the event one of these unwanted missives shows up in your mailbox, here are seven things you should know.
1. First, don’t panic. The letter is not necessarily bad news. The IRS may simply be asking you for additional information--for example, documentation for a deduction you claimed on your return.
2. Read the notice carefully. Such notices normally cover a specific issue about your account or tax return and contain specific instructions on what you need to do to satisfy the inquiry. For example, the IRS may claim that you failed to report all your income in your return and require you to pay an additional amount of tax for the year in question.
3. If the notice is about a correction to your tax return, carefully read the explanation for the change and compare it with the information on your return and your other tax records. You may discover the IRS is right--for example, because you miscalculated the numbers on your return or forgot to report income that was reported to the IRS on Form 1099.
4. If you agree with the correction to your account, usually no reply is necessary unless a payment is due. If payment is due, send it to the address shown on the notice. You need not file an amended return.
5. If, after reviewing your records, you do not agree with the correction the IRS made, you need to make a timely response in writing. Explain clearly why you disagree and include any documents and information you want the IRS to consider, along with the bottom tear-off portion of the notice. For example, if the IRS claims you failed to file a tax return when you really did file one, simply provide photocopies of your filed return.
Be sure to send copies of your documents and retain the originals for your file. Mail the information to the IRS address shown in the lower left corner of the notice. Allow at least 30 days for a response from the IRS.
6. The IRS prefers to deal with you by mail, but you can call the telephone number in the upper right corner of the notice and speak to an IRS agent. When you call, have a copy of your tax return and the correspondence available. You may be able to resolve the matter by telephone. If the agent says your case is closed, make certain you receive confirmation by a follow-up letter from the IRS (this can take several weeks).
7. Keep copies of any correspondence with your tax records.