The Dreaded Letter From the IRS
National Association of Tax Professionals (NATP) Appleton, WI – Have you ever gotten a letter
regarding your tax return from the Internal Revenue Service (IRS)? It doesn’t exactly create a
warm, fuzzy feeling. In fact, IRS mail often conjures up a feeling of dread, some of which is not
warranted. The first actions to take when receiving such a letter are to remain calm and read the
correspondence. Ignoring it is the most common way taxpayers increase any problems.
Letters from the IRS generally fall into the following categories:
- They ask minor questions or seek additional information.
- They send a refund.
- They notify you of an adjustment on your return.
- They confirm an address change.
- They schedule an appointment for an audit.
“In our experience, less than one percent of the correspondence our clients receive ever end up
with an audit and over 90 percent can be handled with no money ever being paid to the IRS,”
relates Dawn J. Renner, CPA, MBA of Minnetonka, MN about her tax and business clients.
Keep in mind that the IRS never initiates correspondence with taxpayers via e-mail. There have
been fraudulent attempts to extract personal information under the guise of collecting information
“from the IRS.” Any IRS e-mail notices should be suspect, so do not respond to any e-mail before
calling the IRS at 800.829.1040 to verify validity. This year has been an especially bad year, with
many fraudulent e-mail notes soliciting information by promising tax refunds.
When you receive the IRS mail correspondence, look at both sides of any pages carefully to
determine any action needed. “Look at the back of the letter/explanation. One taxpayer called and
said he received a letter stating he had $3,750 additional (unreported) income and he owed
$5,000 in tax. The back of the letter contained the explanation of another $11,500 of unreported
income that he completely missed!” alerts Marilyn Meredith, an NATP tax professional in Port
Huron, MI.
Find the tax year to which the correspondence refers – frequently it is for a past year, not current.
Read the text to see what is at issue, and compare it to your tax return for the year in question.
Sometimes you may agree with the information and no further action is necessary. However, if you
do not agree, you may need to take the necessary steps to get the issue resolved, which may
include writing to the IRS with specific documentation to support your claim. If you need to respond,
ALWAYS keep copies of all correspondence.
Instructions should be clearly spelled out within the correspondence, including phone numbers and
who to contact for further assistance. If you have worked with a tax professional, promptly contact
him/her when any correspondence is received and before responding. A tax professional is familiar
with the IRS and can help you.
“In the 35 tax seasons I have been preparing 1040s, I have found that more than half of the IRS
notices that assess additional federal tax are incorrect,” says NATP member Robert D. Flach of
Jersey City, NJ (author of The Wandering Tax Pro web log). “I advise my clients to never ignore an
IRS notice, but also to not immediately assume that the IRS notice is correct. I have my clients send
me any correspondence they receive from the IRS immediately.”
National Association of Tax Professionals (NATP) Appleton, WI – Have you ever gotten a letter
regarding your tax return from the Internal Revenue Service (IRS)? It doesn’t exactly create a
warm, fuzzy feeling. In fact, IRS mail often conjures up a feeling of dread, some of which is not
warranted. The first actions to take when receiving such a letter are to remain calm and read the
correspondence. Ignoring it is the most common way taxpayers increase any problems.
Letters from the IRS generally fall into the following categories:
- They ask minor questions or seek additional information.
- They send a refund.
- They notify you of an adjustment on your return.
- They confirm an address change.
- They schedule an appointment for an audit.
“In our experience, less than one percent of the correspondence our clients receive ever end up
with an audit and over 90 percent can be handled with no money ever being paid to the IRS,”
relates Dawn J. Renner, CPA, MBA of Minnetonka, MN about her tax and business clients.
Keep in mind that the IRS never initiates correspondence with taxpayers via e-mail. There have
been fraudulent attempts to extract personal information under the guise of collecting information
“from the IRS.” Any IRS e-mail notices should be suspect, so do not respond to any e-mail before
calling the IRS at 800.829.1040 to verify validity. This year has been an especially bad year, with
many fraudulent e-mail notes soliciting information by promising tax refunds.
When you receive the IRS mail correspondence, look at both sides of any pages carefully to
determine any action needed. “Look at the back of the letter/explanation. One taxpayer called and
said he received a letter stating he had $3,750 additional (unreported) income and he owed
$5,000 in tax. The back of the letter contained the explanation of another $11,500 of unreported
income that he completely missed!” alerts Marilyn Meredith, an NATP tax professional in Port
Huron, MI.
Find the tax year to which the correspondence refers – frequently it is for a past year, not current.
Read the text to see what is at issue, and compare it to your tax return for the year in question.
Sometimes you may agree with the information and no further action is necessary. However, if you
do not agree, you may need to take the necessary steps to get the issue resolved, which may
include writing to the IRS with specific documentation to support your claim. If you need to respond,
ALWAYS keep copies of all correspondence.
Instructions should be clearly spelled out within the correspondence, including phone numbers and
who to contact for further assistance. If you have worked with a tax professional, promptly contact
him/her when any correspondence is received and before responding. A tax professional is familiar
with the IRS and can help you.
“In the 35 tax seasons I have been preparing 1040s, I have found that more than half of the IRS
notices that assess additional federal tax are incorrect,” says NATP member Robert D. Flach of
Jersey City, NJ (author of The Wandering Tax Pro web log). “I advise my clients to never ignore an
IRS notice, but also to not immediately assume that the IRS notice is correct. I have my clients send
me any correspondence they receive from the IRS immediately.”
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