Should I be Worried if I Receive a Letter from the IRS?
Filing taxes is a duty that all U.S. citizens, permanent residents, expats, and other qualifying taxpayers must satisfy. While it is certainly not a duty that any individual looks forward to engaging in, it is essential that taxpayers handle their taxes promptly and properly. Aside from providing the revenues that the U.S. government needs to function, fulfilling one’s tax filing and tax payment obligation is essential because of the severe penalties and consequences that can be imposed due to non-filing. While the penalties may start with fines and interest, they can quickly escalate if the investigator or auditor believes that willfulness motivated the tax failure. Therefore, most taxpayers dutifully endeavor to ensure that their taxes are filed on time and all obligations are satisfied.
Unfortunately, sometimes taxpayers who think that they have done everything right regarding their tax filing duty will nevertheless receive a letter or notice from the IRS. Many times, the recipient’s first inclination is to panic and immediately conclude that he or she will face a full-fledged audit. Panicking is rarely a constructive means to address a situation and taxes are no different. If you’ve received a letter from the IRS, keep calm and approach the matter with a step-by-step approach. If you still have questions, call an experienced CPA like Ted Kleinman of U.S. Tax Help to schedule a no-cost review of your situation. To contact Ted and schedule a consultation schedule an appointment today or contact the firm online.
Not All Letters from the IRS Are Bad
To start, it is important to point out that not all letters and notices that you receive from the IRS are necessarily bad. For instance, the IRS may seek additional information about a limited aspect of your tax return. However, the position you took may be completely justified and supported by the evidence. Thus, once you submit the information to the IRS, the problem is resolved. In other circumstances, a letter from the IRS may even bring good news. In certain limited circumstances, the IRS may send you a letter or notice communicating the fact that you made an and error and the agency has corrected it in your favor. Now, it is certainly true that the opposite can also be the case and a letter from the IRS should never be taken lightly or ignored, but rushing into a state of immediate panic will not help the situation.
You Can Determine What the Letter Is About by Using the IRS Lookup Tool
Thus, your first step should be to determine what exactly the IRS is attempting to communicate to you in its letter or notice. Therefore, read the letter calmly and assess its contents. However, the letter can sometimes be written rather tersely and may be difficult for a tax layperson to decipher. Thankfully, the IRS generally relies on form letters that are identified by a code. This code is located in the top right-hand corner of the letter or notice. It consists of the letters CP or LTR followed by a string of numbers. You should highlight or write this code down.
Once you have found the code, you can proceed to the look-up tool that the agency has provided to both individual and business taxpayers. The tool lets you type in the letter or notice code on the communication you received to access a brief summary of the purpose of the letter. Individual filers can look up the meaning of the IRS communication they received by accessing and entering their letter or notice code on the individual notices and letters page. If the communication from the IRS concerned your business, you can look up a brief summary of the communication by utilizing the corresponding business notices and letters look-up tool.
At this point, you should have a basic idea regarding why the IRS contacted you. In some situations you may not be required to take further action. In other cases, the IRS may need you to send them information about an aspect of or your overall tax return. In still other cases, the IRS may be notifying you that you are likely an identity theft victim or that you have an unpaid tax obligation. Regardless of the situation you face, it is important that you address the situation appropriately and in a timely manner.
Work with an Experienced CPA to Meet the IRS Request
If you have questions or aren’t exactly sure how to strategically meet the IRS’s demands, it can be wise to work with a tax professional. Ted Kleinman can assist with IRS audits, foreign disclosure issues, and an array of IRS tax problems. To schedule a no-obligation consultation schedule an appointment today.