Resources:
- Understanding your IRS Notice or Letter
- Taxpayer Advocate: Receiving an IRS Notice
- Your State’s Department of Revenue Website
Why YOU Should Care:
If you get a letter from the IRS or a Return Correction Notice from your State’s Department of Revenue, your next steps are important!
First, read through the entire letter!
Generally, the first response people have when they receive a letter from the IRS or their state’s Department of Revenue is to panic. “We are writing you concerning your Form 1040” can be scary words to see!
Need help understanding a letter you received?
Your first step should be to slowly read through the entire correspondence. You should be able to determine:
- Why the IRS or State Department of Revenue has contacted you. Do they think you made a mistake on your tax return? Do they need documents confirming a credit you took (e.g., a 1098-T documenting tuition expenses)?
- What they propose as a solution. Do you owe more money? Should you send them a letter?
- What your next step needs to be. If you agree with the changes they propose to a tax return, you often need to simply send in payment. If the error was in your favor and you are due money, it will either be transferred electronically to your bank or sent to you via check. The letter or notice should also provide information about what to do if you disagree with their changes to your return.
- When you should act. Most letters or notices are time-sensitive and require a response by a certain date.
If you work with an accountant, send him or her a copy of the letter as soon as possible.
What if you disagree?
Sometimes, letters or notices from the IRS or State Department of Revenue are incorrect. Perhaps, for example, your employer didn’t send in a copy of your Form W-2. Many simple issues can be cleared up very easily. You have every right to ask questions concerning the letter to make sure you understand any changes proposed.
If you feel the letter you received was in error, you can either call the number listed on the letter or respond via mail. If you need to provide additional documentation supporting a position you took on your tax return, it may be easiest to send this via certified mail. In your letter, be sure to reference your Taxpayer ID and include copies of all relevant documents. The more thorough you are now the less likely you will have to write additional letters later.
Where to Get Help
The Taxpayer Advocate Service is a wonderful resource to help taxpayers dealing with the IRS. Here you can get help with responding to IRS inquiries, learn about payment plans for any penalties assessed, and learn about tax credits to help you on next years return. Many issues are explained in simple videos.
Your accountant should also be able to help you draft a letter to the IRS or your State’s Department of Revenue. As he or she helped you with the return in question, he or she should be able to answer any questions you have about the notice. Let them know as soon as you receive a return so they can help you get sorted before the deadline.
Need Help Replying to the Letter?
