There are millions of IRS notices and letters sent out each year. There are several things that are necessary to know in case one shows up in your mailbox. First, don't panic because most of the letters can be dealt with simply and painlessly, and may actually be in your favor tax wise.
The notice could be about any number of things, including requested payment of taxes, notification of a change to your account, a request for additional information and/or corrections to your filed tax return. The notice will include the directions for what you need to do. If a correction notice is received, review all correspondence and check your tax return. If there is an agreement to the correction, no reply is required unless the correction requires additional payment.
Correction in your favor will automatically be credited or refunded by the IRS. If the correction is not agreeable, then respond promptly. In order to give the IRS the best response, get help in responding to the IRS to make sure your statement is correct and a penalty that can be avoided is requested with a properly worded letter. Remember that most correspondence can be handled without calling or visiting the IRS.
If a telephone call is required, then call the number on the notice and have a copy of the tax return and all correspondence. The last thing to do if you receive an IRS notice is make sure you keep all correspondence with the IRS. This is extremely important.
Ken Lindow, CPA, MBA, lives and works in Ahwatukee Foothills. Contact him with tax questions or column topic ideas at (480) 940-8351 or Ken@LindowCPA.com.