Let’s face it; it can be tempting to throw away any IRS notices received in the mail simply because we aren’t sure what to do with them or because we want the problems to disappear. Unfortunately, ignoring IRS tax notices can only lead to penalties and expensive fees if you continue to bury those notices deep into your recycling bins.
If you’ve received a notice from the IRS and aren’t sure what it means or what to do with it, continue reading below. We will cover several reasons why the IRS is sending you these notices and who you should contact for more information and guidance.
Do’s and Don’ts for IRS Notices
When you get a notice from the IRS, there are some things that you should and should not do. For example, it is imperative that you don’t ignore the notice.
Most notices from the IRS are about federal tax returns or tax accounts. Regardless of what the notice is for, it is very important to review all the details of the notice because the IRS does not always summarize information into one single letter.
Don’t Throw Away the Notice
Not only is it not a good idea to ignore the IRS notice, but you shouldn’t throw it away either. Taxpayers should keep all of their letters or notices received from the IRS.
Some of those notices, such as the Economic Impact Payment notices, are used during tax time. These types of notices have information that you must input on your return.
It is a good practice to keep any notices or letters for at least three years before discarding them. In the event of an IRS audit, you want to make sure you have all applicable documentation.
Don’t Reply Unless Notified
There is usually no reason for you to reply to a notice unless you receive specific instructions to do so. This is when you should start thinking about getting the help of a tax professional to respond for you. If you owe a payment, you should reply with a payment. If you cannot make a payment, you should speak to a tax attorney about negotiating a payment plan on your behalf with the IRS.
Above all else, do not panic when you receive a letter from the IRS. The IRS will generally send you instructions on what to do next, but keep in mind their sole job is to collect the taxes you owe them – so they tend to not have the taxpayer’s best interest in mind.
The IRS would never send you a notice telling you that they will seize your assets or garnish your wages without several notices being sent out before. If you aren’t sure what the letter you received means or how it applies to you, considering reaching out to a reputable tax professional for more information could reduce your confusion and stress significantly.
What to Do When You Receive a Notice from the IRS
When you receive a notice from the IRS, you will first want to read it over. If the letter concerns a corrected or changed return, you should compare the missing or altered information against your original return.
If you agree to the changes, make sure you keep a copy of the changes. The IRS should provide you with instructions on what to do next.
Take Timely Action
It is imperative that you take action if the notice asks you to do so. For example, if the IRS requests to make a payment on your tax bill, make sure you do so as soon as possible.
The failure to pay your tax liability can cause you more than what you owe. Ignoring to pay will result in additional interest and penalty charges.
Unfortunately, many criminals out there imitate the IRS and use their letterhead to scare people into giving them money. If you receive a notice saying you need to make a payment, but you are sure that you don’t owe the government money, you should reach out to a tax professional such as a tax attorney. They can look over the letter and let you know if it is legitimate or not.
Respond to a Disputed Notice
If you don’t agree with what the IRS sent you, you can respond by sending in a letter explaining why you don’t agree. You can mail the document to the address listed on the document you received.
Make sure you send in information that supports your dispute. If you don’t send in any supporting documentation, the IRS won’t be able to thoroughly consider your dispute. Having the help of a tax professional would ensure that you have all of the documentation as possible to support your case.
Different Types of IRS Tax Notices
The IRS sends taxpayers different notices for several different unique tax-related situations. For example, if you receive notice CP11, this notice is about potential errors made on your return. If the IRS makes any changes to your return, they will send you this notice in addition to details about how much you owe (if applicable).
CP504 Final Notice Letter
If you receive a CP504 in the mail, it means that you ignored all previous notifications from the IRS regarding a tax bill that you owe. This is a notice that the IRS intends to levy your assets to pay off your past due amount.
CP2000 Notice of Underreported Income
If you misreport your income, the IRS sends this letter to inform you that your reported income does not match what they have on file. It is important to note that this document is not an audit but merely a notice letting you know that the math was incorrect.
The IRS will also provide you with a document that explains the changes, and you have the opportunity to either dispute it or agree. If you agree with the changes, you can respond in writing and make your payment if needed.
CP90 Intent to Seize Assets
The CP90 letter is a notice from the IRS that they will put a levy on your assets. This means they have the right to levy any real estate, bank accounts, retirement benefits, and more.
CP297 Intent to Seize Assets and Your Right to a Hearing
This notice is very similar to the CP90, but it goes to your business instead of going to you. This intent to levy is another warning that if you continue not to take any action, they will move forward and seize assets.
LT1058 Final Notice of Intent
If you did not respond to the CP90 or the CP297, the IRS would send you their final notice to levy through notice LT1058. Once you receive this notice, you have thirty days to take action before the IRS follows through with its levy. A tax attorney is one of the most valuable assets you can have on your side in this situation.
Cp508c Denial or Revocation of Passport
If the IRS deems your tax account as “seriously delinquent,” they have the right to place limitations on your passport. The IRS also sends this notice to the State Department, so if you need to renew your passport, you may not be able to do so. Depending on your situation, the IRS may revoke your passport so you can’t leave the country.
IRS Letter 1153 and Form 2751
The IRS typically sends this letter to businesses that refuse to pay payroll taxes. If your company fails to pay those taxes, the IRS will hold you liable. Form 2751 explains the assessed amount and is a document for you to sign agreeing to take responsibility for the debt owed.
Notice CP75 or CP75A
Notice CP75 or CP75A is a notice request for supporting documentation which means that the IRS is auditing your tax return. When you receive this notice, you must respond by the date listed on the letter.
Depending on your situation, the IRS will let you know what you need to send back to them. Make sure that you send them copies of the documents they request. If you send the originals and they get lost in the mail, you won’t be able to make another copy to send to them. This is another case where having a tax attorney on your side is a huge asset to your case.
Tax Code 280e
If you run a business that sells cannabis or cannabis-related items, you may be aware of the tax code 280e. Under this tax code, you are not able to claim any deductions.
Instead, you must pay federal taxes and all other applicable taxes. Fortunately, there are some tax loopholes you can go through, but you will need to reach out to a tax professional for help.
Reaching Out to a Tax Professional
If you’ve received a notice from the IRS that you aren’t sure what to do, you can reach out to a reputable tax professional for help. They can advise you what the letter means and what steps you need to take.
If you disagree with what the notice says and need help disputing what is on the letter, you should reach out to a tax attorney. They can help you negotiate with the IRS to create the best payment plan for you and your situation.
If you need someone to represent you in tax court or to respond to a message from the IRS, a tax attorney is your best bet. CPAs are excellent resources as well, and you might be able to work with one to help you understand any notices sent to you from the IRS, but they cannot represent you in tax court. They may be able to help you reach out to the IRS and respond to their correspondence, but if you need someone to negotiate on your behalf, you’re better off partnering with a knowledgeable tax attorney.
Reasons to Partner with a Tax Attorney
There are several valid reasons why and when you should reach out to a tax attorney. For example, if you are behind on your taxes, you may want to seek a consultation from a tax attorney.
Instead of dealing with those taxes alone, you can employ an attorney to provide you with the best IRS resolutions. They can file the returns and negotiate a reasonable payment plan with the Internal Revenue System.
IRS Garnishments and Tax Liens
There is nothing worse than finding out that the IRS will garnish your wages or that they will place a lien on your property. Before you get to this point, the IRS typically sends you several notices. Because you failed to respond, the IRS will take action, and they will take your assets to pay down what you owe.
If you owe the government a large amount of money or you are found to be evading taxes, they can file criminal charges against you. If you find yourself in a situation like this, you need a tax attorney to assist you so they can reach out to the IRS and handle the entire case on your behalf.
It can be stressful to receive a notice in the mail that the IRS is conducting an audit on your tax returns. The IRS typically tells you what they need, but it can be hard to gather all the appropriate documentation on your own if you aren’t sure what they’re looking for.
Even if you send the IRS what they need, they may send you additional communication or ask you more questions about what you sent. Your tax attorney can handle that on your behalf to avoid that tough conversation or from needing to deal with the associated paperwork.
Help with IRS Notices
Receiving IRS notices in the mail can be very stressful, especially if you aren’t sure what the IRS wants or how to proceed appropriately. There are instances where you won’t need to speak with an attorney or other tax professional such as if there is a minor math error.
If you received a notice that you are being audited or want to dispute your letter, you might want to reach out to a tax professional. Contact us today if you’ve received an IRS notice and need someone to sort it out for you on your behalf.