Each year, the IRS sends out millions of notices (known as CP notices) to taxpayers for a variety of reasons -- from requesting taxpayers verify their identities to providing notice of a balance due.
Whatever the reason, receiving a notice from the IRS could be quite unsettling. However, while there is no reason to panic, it's essential that you do not ignore the notice. Most IRS notices pertain to your tax return account, and the notice could simply be providing you with information about your most recent tax return or your tax account.
For this reason, the first thing you should do when you receive a notice from the IRS is carefully read it and follow these helpful tips:
- Review the letter carefully: The first step you should take when you receive any notice from the IRS is to review it carefully to gain a clear understanding of its content and any request the IRS has made within it.
- Search the notice number on the IRS's website: If you are unfamiliar with the specific notice number, search for it using the IRS's search tool. Typically, the notice or letter number can be found at the top or bottom of the letter.
- Take prompt action: After reviewing the notice, you should always act promptly. If you have any amounts due, acting promptly could potentially minimize interest and penalty exposure, as well as help you reserve your right to appeal.
- Respond to any disputes within the notice: Many IRS notices contain adjustments to tax returns, requests for more information about your taxes, or a notice of audit. If the notice contains this type of information, you should immediately respond in writing to explain the disputed information. And working with a tax professional is the best way to go if you want to avoid going at it alone.
- Determine whether the notice is a request for payment: Once you've carefully read the notice and determined it's a payment request and that no items are in dispute, you should immediately navigate to the IRS's online payment tool and pay any undisputed amounts owed. However, if you have a dispute concerning the amount owed, immediately contact a tax professional to assist you with the tax-debt resolution process.
- Never ignore an IRS notice: No matter what type of notice you receive, you should never ignore it. Ignoring an IRS notice could lead to increased penalty and interest exposure -- or even worse, a lien or levy!
- Contact the IRS: If you are unsure about the information contained in the notice, you should contact the IRS as soon as possible. If you contact the IRS in writing, they will respond within 30 days.
The Millionacres bottom line
Receiving a notice from the IRS can be quite an alarming experience. If you receive a notice from the IRS, remember: Do not panic! Read the notice carefully and follow the instructions enclosed in the letter. If additional assistance is needed, contacting a tax professional to help navigate the terrain of the Internal Revenue Service is always the best option.