Meet our writers

 







Money April 2012

Dollar Sense

Help! The IRS Wants to Talk to Me! Now What?

By Teresa Ambord

Even people who make an earnest effort to do everything right, tax-wise, can end up under the IRS microscope. What should you do? First, take a breath and read the full notice.

So you filed your tax return, got your refund or paid your taxes due, and thought you were done. Then you opened the mailbox and there it was… a notice from the IRS. As you struggle to remain upright, a dozen possibilities crowd your mind. Maybe you exaggerated a little too much on your business expenses? Underreported your cash income a smidge? And what about the bingo winnings you forgot to mention? How could They know and what do They want with you? You open the envelope and sure enough, the Tax Man wants to have a talk with you. Are you in big trouble?

Even people who make an earnest effort to do everything right, tax-wise, can end up under the IRS microscope. What should you do? First, take a breath and read the full notice. If you were thorough and honest in your tax reporting, there’s a good chance that this could be an issue that is easily resolved. In fact, many IRS audits are called “correspondence audits,” meaning they want you to mail them something, like documentary proof of an unusual expense.

Here is the advice of the IRS for you:

  1. Details. Take the time to thoroughly read the notice. Yes, they might be letting you know that you owe more money. Or they may just want more information, more details about a taxable event. IRS notices are usually very specific, so read carefully. Again, the answer may be as simple as mailing the IRS a copy of a receipt or a bank schedule, etc.
  2. Correction. You may be informed that there is a mistake on your return. The IRS will tell you exactly what they believe the mistake is. Get out your copy of your tax return and compare it to what is listed in the notice.
  3. Be prompt. If the notice tells you that you owe more money and you agree, send the money as quickly as you can. The notice may also be telling you that you overpaid your taxes and are due an unexpected or bigger refund. That’s uncommon, but it does happen.
  4. Respond quickly if you disagree. If you think the IRS has made a mistake, it’s even more important that you write back immediately. The notice will give you directions on how to respond. If you have additional documentation that supports your claim, include copies. Be as clear as you can about why you disagree. The notice should include a tear off portion on the bottom. Mail it back to the appropriate address with documentation if you have any. Then be patient. The wheels of government are slow, and it will likely take 30 days or more for the IRS to respond.
  5. Questions? There should be a phone number in the upper right hand corner of the IRS notice if you have questions. Before you place the call, be sure to have your tax return and the notice in hand to refer to.
  6. Copy and certify. Make copies of everything you send the IRS including the notice. Whether or not you are sending the IRS money, the wisest choice is to reply by certified mail, then keep the receipt with your tax records. If you do need to send a check, verify that it is cashed right away.

If you wish to consult IRS publications concerning your situation, Publication 17 (Your Federal Income Tax for Individuals) will have most of what you need. And Publication 594 (The IRS Collection Process) details what you can expect if you owe money. Both are online at IRS.gov, or you can request that copies be mailed to you by calling 800-829-3676.

 

Teresa Ambord is a former accountant and Enrolled Agent with the IRS. Now she writes full time from her home, mostly for business, and about family when the inspiration strikes.

Meet Teresa