Receiving a tax notice from the IRS can be scary. But, there are basic steps that you can take when responding to IRS notice.
Steps for handling an IRS notice
If you received notice from IRS, use the following steps for responding.
1. Do not panic
When you receive a tax notice, your first instinct might be to panic. Don’t do that! Receiving a tax notice does not mean you are in trouble. The IRS might send you a notice for many reasons. Perhaps, the IRS owes you money, made a change to your return, or needs additional information about your return.
2. Read the IRS notice
Now that you’re calm, read the notice carefully. The notice contains a lot of important information. The document will tell you why you are receiving it. And, it’ll include instructions about what to do next.
The IRS assigns each notice a unique number. You can search the number on the IRS website to find more details about your notice. You can also have your questions answered by calling the phone number in the upper right corner of the IRS notice. Have a copy of your tax return and notice with you when you call.
Identify that the tax notice is really from the IRS. Scammers have been known to send fake IRS tax notices that are designed to look like they came from the IRS. If you have any suspicions about the notice you received, do not give out any personal information or money. The IRS will never contact you through email or social media. You can report phishing scams to the IRS on its website.
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3. Respond to the notice
The IRS will tell you if you need to take any action to respond to the notice. Carefully review and follow the instructions. You might need to pay money, verify or correct information, appeal a decision, or even do nothing.
If your IRS notification letter requires a response by a specific date, it’s important to follow through by that date. By complying with the deadline, you minimize additional interest and penalties, and you keep your right to make an appeal. If you ignore the IRS, larger consequences might follow, such as penalties or a tax lien.
If you need to pay money, pay as much as you can. Even if you can’t pay the full amount, paying a little bit will help reduce your total interest and penalties.
If you need to verify or send information, gather the information and send it by the deadline.
If you agree with the information and don’t need to take any other action, you can do nothing.
4. Keep a copy
It’s important to keep a copy of the IRS notice in your business’s tax records because you might need it at a later date. You might keep the original paper notice. And, you can create a digital copy to keep on your computer and in the cloud.
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This article is updated from its original publication date of October 28, 2015.This is not intended as legal advice; for more information, please click here.