No one is happy to get an IRS notice in the mail, and a common reaction probably includes more than a little anxiety.
How you handle the situation is very important, and these tips will help you decide what to do next.
Make sure it’s authentic
IRS-related scams are quite common, and the scammers are counting on the fact that people will panic and pay up.
“Remember, the IRS will never call or email you,” says Ted Fricke, managing director of Fricke & Associates, LLC
If you receive a letter, this too could be a scam. The IRS offers several tips for verifying the letter’s authenticity, including calling 1-800-829-1040.
Take note of any deadlines
Your IRS notice may contain deadlines, which are very important to note and adhere to. Missing or ignoring deadlines can result in additional penalties and fees and make your situation more difficult.
Contact a professional
An IRS notice usually falls into one of two categories, Fricke advises. The agency may be asking for additional information (about an incorrect Social Security number, for example). The other type of notice is from the collection division and may ask for additional payments and even penalties.
You may be tempted to write a check to end the matter quickly, but you shouldn’t respond in any way until you let a professional look over your notice. Responding on your own can make your situation worse, Fricke advises.
Understand your letter
At top of or on the bottom right-hand corner of your IRS notice, you’ll see a notice (CP) or letter (LTR) number. It usually has a combination of letters and numbers, such as CP2000. This can give you more information about the type of notice you’ve received.
For example, a CP2000 means that the information provided on your tax return doesn’t match the information the agency has for income and/or payment information. A CP14 means that the IRS says you owe money on unpaid taxes. You can look up your code on the IRS website by searching for individual filers’ codes or business filers’ codes.
Ask your tax professional about penalties
The IRS may assess penalties in certain situations, but it can be possible to have these abated for various reasons. For example, Fricke explains, if you have a first-time penalty for a late payment and you haven’t been penalized for this in three years, you may be able to get an abatement.
It’s important to contact a professional to learn about these instances so you can avoid paying penalties unnecessarily.
Arrange for payment if you owe the IRS
Even if you owe the IRS money, you don’t have to pay it in full. You can, with the help of your tax professional, enter into an installment agreement or an offer-in-compromise, which means the IRS has agreed to accept a lower amount.
An IRS notice is no reason to panic, but it should prompt you to contact a certified public accountant to resolve the matter in a way that’s in your best interests. Contact Fricke & Associates, LLC in metro Atlanta for help in responding to the IRS. We are experienced in providing a variety of services to individuals as well as Atlanta area businesses and can help you resolve issues with the IRS.