I Got a Letter from the IRS, Now What?

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Disclaimer:

The view expressed in this article is the opinion of the writer and is not tax advice. Tax law is always subject to change. This article is for information purposes only. Always consult a qualified tax professional for advice on tax planning and strategies.

Letters from the IRS can be scary, so let’s demystify them a little. The IRS sends out thousands of letters every year ranging from needing information to intent to levy.

How does the process work? Are they going to take my house, car, or freeze my accounts? What if they call me and demand payment in the form of gift cards or text me that I am going to jail? (That last one is a scam. The IRS doesn’t contact you by phone, text or email demanding money or gift cards.) The IRS doesn’t take your house or freeze your accounts on first letter contact; that comes after several attempts at trying to get you to comply with audits and inquiries.

If you get a letter, the first thing you should do is contact your accountant or tax preparer so they can help you understand the letter and what information is needed. Then either you, or your tax preparer, need to establish contact with the IRS about what is being requested. Make sure to always send replies and any copies of information being provided by certified first class mail with a return receipt for proof of delivery. Read the letter thoroughly, make sure you know who and where you need to send the information.

Also, take heed of the allotted time to respond; a delay could void your chance at resolution. In my experience, the IRS will contact you because it needs more information from you, for a rare/unforeseen calculation error, or more or less income was reported on your taxes compared to what information was reported to them by your employers. They could also be contacting you due to identity theft, which is most troublesome for you because it is a whole process to verify and protect your account that is very time consuming.

IRS letters are very important, and you need to treat them seriously and respond in the allotted time given. Most issues can be dealt with the first reply although some letters require more correspondence, or some issues will need to be met with an appointment to the nearest IRS local office for audit. It is a good rule of thumb to get an ID.me account and an Identity protection PIN to combat identity theft and stay informed in your account with tax compliance, refund status or any issues that may pop up.