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A Guide to Understanding and Responding to IRS Notices


Receiving a letter from the IRS can be unsettling. Getting a hold of and navigating the many departments of the IRS can be challenging as well.

Our team of experts has extensive experience working with the IRS and assisting taxpayers in responding to IRS Notices.

Here’s a guide to help you understand the most common IRS notices and what they mean. 

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A Guide to Understanding and Responding to IRS Notices

A collection of various IRS notice documents fanned out on a white background. The notices include different types such as CP14 and CP90, with visible headlines like 'Amount due immediately' and 'Intent to seize your assets and notice of your right to a hearing.' Names and addresses are shown, along with detailed billing summaries and payment vouchers

Receiving a letter from the IRS can be unsettling, but it's often a straightforward matter that can be resolved with the proper steps. Here's a guide to help you understand and respond to various IRS notices.

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Reasons for IRS Notices

There are several reasons for the IRS to send notices to taxpayers. You might receive one because you have a balance due, there are discrepancies in your tax return, or the IRS needs additional information. It's also common to receive a notice if your refund amount is different from what was expected or if the IRS made changes to your tax return. Be vigilant, however, as scammers sometimes impersonate the IRS; genuine IRS communication will typically start through the mail.

Common Types of IRS Notices

IRS notices can vary, but you can view some of the more common ones below:

Each of these notices serves a different purpose and requires specific actions. If you have received a notice that's not listed, please contact us now.

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Steps to Take When You Receive an IRS Notice

First and foremost, keep calm. Most notices from the IRS are routine and can be resolved without much difficulty.

  1. Take the time to read the notice thoroughly. Ensure you fully understand what the IRS is asking or informing you about, as it could be anything from a minor update to something more significant.
  2. If the notice requires a response, reply by the date indicated. Always use the method of communication suggested in the notice to avoid any miscommunication.
  3. Remember, responding to the IRS is essential. Not doing so can result in additional penalties or more complex issues.
  4. Only reply to the IRS if it's necessary. You don't need to do anything if the notice does not require a response.
  5. If the notice indicates that you owe taxes, try to pay as much as you can afford. Paying even a partial amount is better than not paying at all.
  6. Keep a copy of the notice for your records. It’s always good practice to have documentation on hand.
  7. Please contact the IRS to discuss or dispute the content if you find discrepancies or disagree with the notice.
  8. It's crucial to take every notice from the IRS seriously. Ignoring them can lead to more severe consequences like tax liens, levies, or even wage garnishment.
  9. If the notice arrives late or the response time needs to be longer due to delayed delivery, contact the IRS to inform them. You can request an extension if required.
  10. Always be vigilant for scams. The IRS does not typically contact taxpayers via email, text, or social media. If you suspect a notice is fraudulent, contact the IRS directly to verify its legitimacy.

What If You Can't Pay What You Owe?

If you're unable to pay the full amount, the IRS offers options like Installment Agreements. These agreements allow you to pay over time, although interest and penalties may still accrue. It's essential to keep up with current taxes to avoid defaulting on these agreements.

Seeking Professional Help

Understanding IRS notices can sometimes be complex. If you're unsure how to proceed or owe a significant amount, it might be wise to consult a tax professional. They can provide guidance, help you understand your options, and represent you in dealings with the IRS.

CryptoTaxAudit has a team of professional Certified Public Accountants, Enrolled Agents, and Tax Resolution Specialists ready to assist you.

Avoiding Tax Scams

While tax scams can occur any time of the year, they tend to surge during tax season, with bad actors preying on innocent taxpayers, often exploiting their concerns and lack of information. It's essential to stay vigilant and recognize the signs of fraudulent activities. Typically, scammers impersonate IRS officials to intimidate taxpayers into paying fictitious tax bills or sharing personal information. Remember, the IRS will never initiate contact with taxpayers by email, text messages, or social media to request personal or financial information. They usually contact taxpayers through postal mail first. If you receive a phone call from someone claiming to be from the IRS demanding immediate payment, be cautious, especially if they insist on specific payment methods like prepaid debit cards, gift cards, or wire transfers. These are red flags for scam activities.

Be aware of phishing attempts, where scammers send emails or texts designed to look like they're from the IRS or closely related agencies. These messages may contain links to fake websites intending to steal personal information. The IRS does not send emails about your tax refund or sensitive financial information. If you encounter any suspicious IRS-related communication, report it to the IRS. To protect yourself, always verify the authenticity of IRS letters by contacting the IRS directly through the official contact channels listed on their website. By staying informed and cautious, you can protect yourself from becoming a victim of these tax scams and ensure your personal and financial information remains secure.

Additional Resources

For further guidance and information regarding IRS notices and your tax responsibilities, consider exploring these resources:

  • IRS Official Website: Visit IRS.gov for comprehensive information on tax-related topics, including IRS notices.
  • IRS Taxpayer Assistance Centers: Find a local Taxpayer Assistance Center for in-person help with IRS notices or other tax issues.
  • IRS Payment Options: Discover various payment options the IRS offers for managing taxes.
  • Understanding Your IRS Notice or Letter: Get specific information about IRS communications at Understanding Your IRS Notice or Letter.
  • Taxpayer Advocate Service: Access help for unresolved tax issues from the Taxpayer Advocate Service.
  • Interactive Tax Assistant: Use the Interactive Tax Assistant to find answers to questions about tax law.
  • Taxpayer Bill of Rights: Review your rights as a taxpayer by visiting the Taxpayer Bill of Rights.
  • IRS Frequently Asked Questions: Explore the FAQ section on the IRS website for common questions about notices and taxes.
  • IRS Scam Alerts: Stay informed about the latest tax scams and how to recognize them at Tax Scams/Consumer Alerts.

Utilizing these resources can provide you with valuable information and assistance. However, consulting with a qualified tax professional for personalized advice for complex tax situations is always advisable.

Conclusion

While receiving an IRS notice can be stressful, most issues can be resolved by understanding the notice, responding appropriately, and seeking help. Remember, the earlier you address IRS communications, the smoother the resolution process will likely be.