Filing and paying your taxes on time is one of the critical aspects of running your business smoothly. After all, you would not want to get into trouble with the IRS. Obviously, you can expect a notice from them if there are some discrepancies with your returns and taxes or you have delayed filing or paying them. But even if you do everything right, you may still get a letter from them. Surprising as it may be, it is true that the IRS sends across millions of letters to the taxpayers every year for diverse reasons.
Though getting a letter from the IRS is not something that would make you happy, you still need to be prepared to handle the situation. The letter may just be an informational document or something serious, depending on the individual circumstances. What really matters is to be aware of what to do and what not to do when you get one. Here are some dos and don’ts that you must follow if you get a letter from the IRS.
Do review the information
You must absolutely review the information that the IRS has shared in the letter. Several times, taxpayers make some inadvertent errors while filing the return. These could range from mathematical errors to clerical ones or even about attaching a tax form or schedule with the return. The IRS may still accept the return but will send a letter about the rectified tax return. If you get one, go through the revised information and compare it with the original return. Make notes about the changes in your copy and keep it for the record.
Do take timely action
In case the letter is more than just a notice of information, you should take the requisite action as soon as possible. Some situations such as changes in your account, balance taxes, payment requests or a specific issue on your tax return need to be handled well in time. In fact, taking quick action can save you from a penalty or additional interest.
To respond to a disputed notice
When you do not agree with the IRS, make it a point to mail a letter to them explaining the reason why you dispute the notice. Include the requisite documents and information for them to review while considering the dispute. It is best to have an experienced tax attorney to handle the situation on your behalf because you have to be very careful with the correspondence with the tax authorities. These experts know exactly what to do and the right set of documents to be shared with the IRS in case of a disputed notice.
Don’t ignore the letter
The biggest blunder that you can make with a letter from the IRS is to ignore it. Even if it is just a piece of information, it still deserves due attention. A majority of IRS letters and notices are related to tax accounts and federal tax returns. A notice may deal with a specific issue with your return or payment and may also include instructions that you need to follow in your case. If you are not sure about the issue and instructions in the letter, you should seek guidance from an expert.
Getting a letter from the IRS may be disconcerting but there is no need to panic when you get one. It may or may not spell trouble, depending on specific situations. The best way to deal with a letter is to go through it carefully and see what needs to be done on the basis of the instructions mentioned therein. It is vital to take timely and appropriate action to save yourself from any hassles with the tax authorities.
Don’t reply unless there are instructions to do so
Typically, the taxpayer does not need to reply to an IRS letter unless it specifically instructs them to do so. However, you should go ahead and pay your taxes to the IRS if the letter is intimation about the amount you owe to them. On the other hand, you can just note the changes if the letter is about any change or correction in your returns or taxes. Getting a letter from the IRS is something common and you may face the situation once or more. You need to be aware of scams to know whether a letter is genuine or fake. Remember that the IRS contacts taxpayers by mail. If you get a message via text or social media, it may be a scam. Be sure to consult a tax specialist to know the difference.