Got a Letter from the IRS? Don’t Panic, Here’s What to Do
Letter from the IRS
In August 2022, United States President Joe Biden signed a legislative package to deal with mounting inflation and budgetary shortcomings.
Part of the Inflation Reduction Act calls for the hiring of 87,000 new employees at the Internal Revenue Service, and this provision of the law got plenty of news media coverage.
Many feared that an “army of IRS” auditors would come at the ready to bust down doors in search of unpaid taxes.
The reality of this measure is that the IRS has been understaffed for a while, and there is a real need to process multiple backlogs at the agency.
This also means that American taxpayers are bound to see more letters from the IRS in their mailboxes, but this is not a reason to panic. Here’s what to do if you receive an IRS letter.
Most IRS Letters Are Not For Audit Purposes
Only a small fraction of all taxpayers are randomly selected for audit. It remains to be seen whether this will change over the next few years; some proposals would increase the auditing of business tax returns, but this is still up in the air.
Most IRS letters are not audit notifications; they are for adjustments to refund amounts or requests for information.
Don’t Ignore IRS Letters
The worst thing you can do with an IRS letter is to dismiss it without opening it. This happens very often; many people ignore IRS correspondence in the same way they overlook letters from the Social Security Administration because they think they are for general information.
As previously indicated, the letter may request the information needed to send out a nice refund.
Dealing With Audits and Owed Taxes
In the event you do get an IRS letter that seeks to collect unpaid back taxes, the best course of action is to seek adequate representation.
Should the IRS request your collaboration on a business audit, you may want to contact an accountant.
If the letter is for tax collection purposes, a tax attorney that handles IRS trouble can help with strategies such as an offer in compromise, abatement, or an installment plan.
Letters Can Be Mistaken
It is not unusual to receive IRS letters that are erroneous or contradictory, particularly when the agency is handling backlogs.
Let’s say you get a letter demanding a tax return filing and money you know you already sent.
If you can get confirmation from the bank that the check you sent was processed, be sure to have it handy when you contact the IRS.
To sum it all up: Don’t ignore a letter from the IRS because it could be about refunds or credits, but don’t panic if the letter is related to taxes you may owe.
All the same, be sure to contact a tax accountant or tax lawyer if the IRS is after a considerable sum.
Category: Taxes
