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How to Respond to IRS Letters: 7 Tips

January 25, 2022

Each year, the IRS sends millions of letters to taxpayers for a variety of reasons from compliance statements to refunds. Receiving a letter from the IRS can be stressful, especially when a time-consuming process or hefty fine is involved. However, it is important to understand your rights when communicating with the IRS. Here are some tips to help you navigate the process.

1. Don't Panic!

It is easy to panic in situations like this, but most of the time, you only need to respond in order to take care of a notice from the IRS. Carefully read what is on the notice, the purpose of the letter, and what actions the IRS is asking you to take.

Take the time to research anything you might not understand about the letter to increase clarity of communication between you and the IRS.

2.  Respond

If you agree with what the notice says, simply follow the actions described in the letter. However, even if you do not agree with the notice sent to you, it is important for you to still respond. If you disagree, simply write a letter to explain why. Be sure to:

  • Include any information and documents you want the IRS to consider.
  • Mail your reply with the bottom tear-off portion of the notice.
  • Send it to the address shown in the upper left-hand corner of the notice.
  • Allow at least 30 days for a response.

3. Be Prepared to Call

If you have any questions, you can refer to the IRS website, which has resources that might answer your questions. If your questions are too specific or it is not covered on the website, you can call the phone number in the upper right-hand corner of the notice.

Have a copy of your tax return and your notice handy when you call. This will help the IRS answer your questions.

4. Keep Your Notice

This tip is simple and straight forward. Store copies of any notice you receive with your other tax records in a safe place in case you need to refer to it in the future. If it is misplaced or thrown away, it can delay the process, or worse.

5. Review Changes or Corrections

If you get a notice stating that the IRS has made a change or correction to your tax return, review the information, and compare it with your original return. Label and examine the changes to decide whether it is amenable or worth challenging.

Understanding each change that occurs to your tax return is essential for both the matter of the letter and any further communication that might be necessary.

6. Be Aware of Fake Notices

If you receive an email or social media message asking for personal or financial information, it is most likely a scam. Revealing private or financial information over the internet could have grave consequences. The IRS sends notices by mail only. If you are worried about receiving a fraudulent IRS notice by mail, the IRS has information to help understand how and why the IRS might contact you.

7. Contact Leading Retirement Solutions

We regularly assist clients and provide feedback on how to respond the IRS as well as prepare responses on your behalf. We understand your rights as a business owner and will help you navigate any compliance issues you may be facing.

If you follow these tips, you are more likely to initiate clear communication with the IRS and avoid many of the fraudulent activities associated with IRS impersonation.

For more tips and information regarding retirement plans, contact us.

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