An IRS letter — basically a letter coming from the Internal Revenue Service — is nothing to be afraid of. Just keep in mind this to-do list in the event you receive a letter from the IRS.
How to Respond to an IRS Letter: A Step-by-Step Guide
Step 1: Read the IRS Letter Properly
If ever you receive a letter from the IRS, it may have something to do with any of the following scenarios:
- You have a tax balance due or refund.
- The IRS has questions about your tax return or payment.
- There is a delay in the processing of your return.
- The government needs additional information from you.
- There are issues related to IRS collection.
You will only know the purpose of the IRS letter sent if you read what’s inside the letter. The letter will contain details and instructions you need to do to address the issues mentioned above.
A lot of people would love to use the IRS in their illegal schemes. So opening and reading the letter will tell you if it’s a certified letter from the IRS.
Step 2: Do Not Panic or Ignore the IRS Letter
It may be a bit scary and alarming if you receive a letter from the government — more so a notice from the IRS. Just remember that the IRS is not your enemy.
The IRS letter is very important because they inform you about the specific tax issues you need to address. It also provides you with specific instructions on how you will address the issues raised.
If you feel nervous about receiving an IRS letter, just think of it as one of the utility bills you usually get. They might give you some headaches or inconveniences, but at the end of the day, you’ll be fine once you’ve complied with them
The IRS letter is, in fact, very helpful for a taxpayer. So make sure you pay attention to every detail in it and make sure you do not just brush off the existence of the said document.
Step 3: Review the IRS Letter
Apart from knowing the instructions on the IRS letter, you should also be very critical with the information stated in the said letter. Review the letter well to know how you’ll respond to it.
If the IRS letter concerns changes or corrections in your tax return, make sure to compare the details in the letter with those in your original return. Agree to the correction if you find it correct, or inform the IRS if you see any discrepancies.
Also, review if the details on the IRS letter properly reflect your tax identification. The IRS people are also humans prone to some errors, so they might either get some details incorrect or send the letter to the wrong individuals.
Again, you need to check if it’s a certified letter from the IRS. Watch out for details and language that may sound too informal or bogus.
Step 4: Respond to the IRS Letter
When the IRS sends a letter, it is only natural that they will expect a response from your end. An IRS letter serves as a notice, and the taxpayer has the responsibility to react to the government’s inquiry.
Most of the time, the IRS provides a specific deadline on when recipients should send their responses. You should comply and be particular with these deadlines so that you will:
- avoid paying interest or penalty charges
- maintain your good standing with the IRS
If you have a concern about the IRS letter, or if you do not agree with what the IRS says in the notice, send a reply to explain your side. Taxpayers should allow a 30-day window for the IRS to respond.
The IRS address where you’ll send your response to is found on the contact stub at the bottom of the notice. To help the IRS review your response, include important information and attach documents when sending the reply.
Step 5: Pay the Amount in the IRS Letter
Sometimes, the IRS might require letter recipients to pay a certain amount. This might hold true if the recipient has a previously unaccounted tax balance to pay to the government.
Not enough cash to pay the full amount stated in the IRS letter?
The IRS will not force you to immediately pay the full amount you owe. Discuss with IRS on how you can pay them by installment.
In paying the amount stated in the IRS letter, you may choose to follow any of these payment methods:
- Go personally to any IRS office and apply for an Online Payment Agreement or Offer in Compromise
- Visit the IRS website and go to the payments page
Step 6: Keep a Copy of the IRS Letter
Once you’ve responded to the demands of the IRS, it doesn’t mean that the IRS letter is already of no importance to you. You’ll never know when you’ll need it again, so make sure to just keep a copy of the letter safely.
What if the IRS sends you a follow-up notice even after you responded to a previous letter? Or, what if the IRS sends you a letter twice and provides the same demands in both instances?
Keeping all letters from the IRS would help you track whether the government has made some mailing errors. This will also help you check if the IRS is already asking for too much from you.
For proper safekeeping, store your IRS letter together with your other tax records. This way, you’ll know when to retrieve any past IRS letter in case you’ll need to see one.
Getting a letter from the IRS does not automatically mean that you committed something wrong against the government. All you need to do to comply with the instructions stated in the letter to ensure good standing with the IRS.
Have you already experienced receiving an IRS letter? Share with us your experience in the comments section below.