Why you’re receiving an IRS Notice, and what your response should be
A notice from the taxman is never fun to receive. When you get one, it fills you full of dread and fear of the unknown. Most people are law-abiding, tax-paying citizens, but can sometimes fall foul due to accidental mistakes. So what should you do if you receive one of these dreaded notices in your mail?
What is a notice?
There are actually several different types of notices you can receive from the IRS, each regarding various matters. Regardless of their severity, they all need attention and care. One of the more frustrating notices to receive is a CP49 Notice. The tax specialists at taxsharkinc.com detail that you will receive this kind of notice to be informed of any tax refund you should be owed, but the IRS will seize it to pay off any outstanding tax they believe you owe. This particular option is frustrating, and you might be able to get a refund you are owed by using the services of companies specializing in tax notices. Nevertheless, many other notices range from frustrating like the CP49 to the more severe, like an audit which will go through your finances with a fine-toothed comb. Whatever message you receive, there are steps that you should take before taking action.
While some people are more prone to panic than others when receiving an IRS notice, even the most stoic will feel a pang of fear. The average taxpayer will never be able to understand tax law because of its inherent opaqueness. Therefore, the best you can do when you get the notice is to stay calm, put it down, and go about your morning routine as you normally would. This is not the same as ignoring it, that is a mistake, but you should get your mind in gear before reading the notice and what it means. If you start trying to figure it out before you’ve had your cup of coffee and breakfast, you will only work yourself into more of a panic and possibly lose the entire day.
Read the notice
Once you have freshened up and are ready to look into it, you should find a quiet place to read it over. If you have a partner, you should read it together to avoid any surprises down the road. As a first step, make sure that you are not falling victim to a scam. Many of these fraudulent notices are sent out by scammers, hoping that people will send them money when the IRS is not investigating them. Generally speaking, if you received your information via the mail, it is probably the real deal. On the other hand, the IRS will never send out a message via social media, SMS, or email. If you have received your notice this way, you must inform them immediately to ensure it isn’t a scam and if it is, allow them to respond.
Don’t reply unless informed to do so
Most notices are just that, a notice. Therefore, there is often no need to come up with a response. The notice will inform you of what actions you need to take to rectify the situation. For example, in the case of the CP49 mentioned earlier, if you believe it to be correct, and you do owe tax, you can probably leave it and allow the IRS to take the tax. If you owe more, you must pay it off, but if the rebate is the same as what you owe, you can probably ignore it. However, there are two situations when you might want to respond:
- If you have been asked to: If the notice tells you to contact them as soon as possible, you should follow this suggestion. The failure to do so could be interpreted as ignoring it and get you into further trouble.
- If you disagree: In case you disagree with a notice, you may file a dispute and respond to the contact details that will be stated on the message. Ensure you have all details available to dispute the claim.
Speak with an accountant
If the notice is particularly problematic, you may want to enlist an accountant or other services that deal with these issues. Due to the complexity of some tax issues, you might be unaware of how to proceed. Such notices will most of the time have a list of actions you should follow, but these are typically vague and don’t help if you don’t know what you did wrong in the first palace. Tax specialists who live and breathe tax law can advise you on the best path forward and often result in a speedy resolution.
Although receiving a tax notice can be a stressful situation, you must stay calm and take stock of the problem. Nevertheless, read it thoroughly and follow the steps it outlines. If you are confused, you should hire a tax expert who can aid you through the resolution process.