The IRS sends notices for many reasons: a balance due, a change to a filed return, a question about missing information or a request to verify your identity. A notice does not automatically mean you did something wrong or that you are being audited. It does mean something needs your attention, and acting early usually leaves you with more options.
Step by step
Open it and read the whole thing
Set it aside only long enough to find your tax records. Look for the notice or letter number, usually in the top or bottom corner, along with the tax year and the form involved. The IRS website has a page explaining many common notices by number.
Find the response date
Mark any due date on your calendar right away. Interest and penalties can grow while a balance goes unpaid, and missing a response date can limit your choices, including certain rights to dispute a proposed change.
Compare it with your records
Pull out your copy of the return and the forms behind it, such as W-2s and 1099s. Often, a notice comes from a mismatch between what you reported and what an employer, client or bank reported to the IRS. Check whether the notice is accurate before doing anything else.
Respond the way the notice asks
If you agree, follow the instructions and pay what you can by the date shown. If you cannot pay in full, the IRS offers payment options, and it is usually better to respond than to stay silent. If you disagree, write back by the date given, explain why and include copies of supporting documents, never your originals. Keep a copy of everything you send.
Do not file an amended return just yet
The instructions on many notices tell you whether an amended return is needed. Filing one before you understand the issue can make the matter more confusing.
Watch out for scams
The IRS generally makes first contact by mail. Be suspicious of unexpected calls, texts or emails that demand immediate payment, ask for gift cards or threaten arrest. If you doubt that a letter is genuine, compare it with the IRS website or call the IRS at a number listed there rather than one given in the message.
When to bring in help
Some notices can be handled in an afternoon. Others are worth a second set of eyes, especially if they cover several years, involve payroll taxes or mention an audit or a large sum. A tax preparer or consultant can help you understand the notice and organize your records. If you need someone to deal with the IRS on your behalf, that is handled by an authorized representative of your choosing, usually through IRS Form 2848.
Proactive Strategies, Inc. is not a CPA firm and does not represent clients before the IRS. We can help you read a notice, gather what is needed and prepare your information for the representative you choose. This article is general information rather than advice for a specific situation. Learn more about our support for tax concerns and IRS notices.