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If you receive a letter from the IRS, you’re probably going to have a knee-jerk, instinctual fight-or-flight reaction. Just calm down, back off from that predictable response, and take a deep breath.

You’re not the first to receive a letter from the IRS.

Last year, more than 1.6 tax filers received letters notifying them of math errors alone. That’s more than the 1 million who were audited. The IRS sends notices and letters for these reasons:

  • You have a balance due
  • You are due a larger or smaller refund
  • They have questions about your return
  • They need to verify your identity
  • They need more information
  • They made a change to your return
  • They need to notify you of delays in processing your return

What should you do if you receive a letter from the IRS?

1. Read the envelope and the contents.

The first thing to do is check the return address to make sure it’s from the Internal Revenue Service. As basic as this may seem, don’t assume you know what’s in it, so read the letter or notice. The topic will be clear. The IRS usually covers a very specific issue about your account or a tax return. The IRS will normally let you know what they need, what they’re changing and will tell you if you need to reply and where to send the reply.

2. Don’t panic!

Most every list of tips puts this somewhere near the top. Fight or flight is a normal reaction to what appears to be an attack. In this case, fight translates into anger, and flight can become procrastination. Simply put, don’t let your temper cloud your judgment and don’t put off until later what should be handled immediately. Call us, we know what to do!

3.  Don’t call or write the IRS

Be careful about calling. You could be in for a long hold and an unrewarding outcome. Documentation of a phone call (or a personal visit) is critical. If you call and obtain an extension to the response deadline, or instructions other than those in the letter, immediately follow up with a letter to the IRS. Include the date and time of your call, the name and badge or ID number of the person you spoke with, and the referencing numbers of the letter you received (usually in the upper right corner). Also include a copy of the letter you received (you keep the original). Make a copy of the letter you send and keep that copy, too!  And remember, by starting a phone conversation and sending correspondence, you could be making matters much more complicated and stressful.

4.  Contact your tax preparer or a tax professional immediately

My clients know we want and need to be contacted immediately if they receive a letter or notice from the IRS. We can handle it. If your notice or letter requires a response by a specific date, there are two main reasons for you to comply:

  • to minimize any additional or potential interest and penalty charges, and
  • to preserve your appeal rights if you don’t agree

Don’t take the chance of putting yourself in a worse situation. The IRS doesn’t assume you’re innocent until proven guilty or wrong. It’s the other way around.

As your CPA, we have the ability to represent you. Representation rights, also known as practice rights, fall into two categories:

  • Unlimited Representation
  • Limited Representation

Unlimited representation rights allow a credentialed tax professional/practitioner to represent you before the IRS on any tax matter. This is true no matter who prepared your return. Credentialed tax professionals who have unlimited representation rights include:

Limited representation rights authorize a proper tax preparer to represent you if, and only if, they prepared and signed the return. They can do this only before IRS revenue agents, customer service representatives and similar IRS employees.

5.  The IRS agents are tax professionals.

So are we, and we have unlimited representation rights. Every year new clients come to us because they are either being audited or have received a letter from the IRS. As your CPA tax professionals, we work with you throughout the year so you’re in control, you’re proactive rather than reactive. Here are some tax prep things you can do now. And here’s the Golden Rule for your tax strategy.

What’s the bottom line?

We establish and maintain a personal and business relationship with our clients. We know that Your LIFE Is Your Business, and Your BUSINESS Is Your Life, and we take both very seriously. If you have questions, schedule an appointment with us now. Remember, nobody wants to receive a letter from the IRS, but when it happens, contact us.

Call 479.478.6831 or schedule an appointment using my Calendly Page (it’s easy!) or contact me by email melanie@radcliffcpa.com

You may also find these topics interesting:

Straight from the IRS

Who can represent you?

Understanding tax professional credentials

Don’t wave red flags at the IRS

Proactive tax strategy is for businesses and individuals

 

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