What To Do When You Receive a Tax Notice from the IRS

Every year the IRS sends millions of letters and notices to taxpayers. If you happen to be one of 2016’s “lucky” recipients we have some tips for you.  First and foremost – don’t panic. Simply read the letter carefully and be prepared to follow it’s instructions.

Be sure to keep copies of all IRS correspondence and make a note of any timelines or deadlines stated in the letter. With most notices from the IRS, it is simply a matter of carefully following the outlined instructions. Other times, follow-up may be required.

*”If you receive a correction notice, review it and compare it carefully with the information on your return. Check your return to see if the IRS is correct. Sometimes even the IRS is wrong. There could be a mismatch about IRS Form 1099. If you agree with an IRS correction to your account, no reply is usually necessary–unless a payment is due. Sometimes the notice will say you will be billed. Sometimes you can expedite the billing (which may reduce interest charges that may be added) if you sign and return the notice indicating your agreement.

Be careful, and make sure you want to agree rather than contest the notice or issue. If you do not agree, it is important to respond. Explain why you disagree. Include any documents and information you want the IRS to consider, along with the bottom tear-off portion of the notice (or a copy of the entire notice). Mail the information to the IRS address shown on the notice. Allow at least 30 days for a response (and it often takes longer).”

Most often, the letter is in regards to an issue with your account or tax return so the best course of action at that point would be to give a copy of the letter to your accountant. An experienced CPA firm handles IRS notices regularly and they will know how best to proceed. Oftentimes, follow-up questions will be required and communications with the IRS can be tricky sometimes so it’s best to leave it up to your Certified Public Accountant (CPA).

For more on “understanding your IRS notice” visit: www.irs.gov/uac/Newsroom/If-You-Receive-an-IRS-Notice-Heres-What-to-Do

*Robert W. Wood, Forbes, February 24, 2016: http://www.forbes.com/sites/robertwood/2016/02/24/how-to-respond-to-irs-very-carefully/?ss=taxes#2e7a9db37023

Davis & Hodgdon Associates CPAs is a full-service public accounting firm with offices in Williston and Rutland Vermont. The firm is a member of Vermont Businesses for Social Responsibility (VBSR), Vermont Business Environmental Partnership (VBEP), Lake Champlain Regional Chamber of Commerce (LCRCC), Vermont Chamber of Commerce, and Women Business Owners Network (WBON).  The firm serves its clients by providing progressive, proactive services through expert staff, sophisticated technology, and unparalleled efficiency.

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