An envelope from the IRS is one of the more unpleasant things to find in a mailbox. The good news is that most notices are routine, most are resolvable, and almost none of them require you to panic. What they do require is that you read the letter and respond on time.
First, do not ignore it
Nearly every notice has a deadline printed on it, and the options available to you shrink once that date passes. A letter that could have been answered with one document can turn into a bill that is much harder to unwind. Open it the day it arrives.
Second, do not pay it just because it asks
A notice is the IRS telling you what it currently believes. It is not always right. Common causes include a form that arrived after you filed, a figure reported under the wrong year, or a mismatch between what you reported and what a third party reported about you. If the notice is wrong, paying it is the expensive way to close the file.
Find the notice number
Every letter carries a notice or letter number, usually in the top right corner. It looks like CP followed by digits, or LTR followed by digits. That number tells you exactly what kind of letter it is, and the IRS publishes a plain-language explanation for each one. It is the single most useful thing on the page.
What a typical resolution looks like
- Identify what the IRS thinks is wrong, using the notice number and the explanation section.
- Compare it against your own records for that year.
- If they are right, agree and arrange payment, including an installment plan if you need one.
- If they are wrong, respond in writing before the deadline with the documentation that shows it.
Most cases end at step three or four. Relatively few become anything larger.
When to bring in help
Bring the letter to a preparer before you respond if the amount is significant, if it covers a year someone else prepared, if it proposes changes you do not understand, or if it mentions an audit or an examination. A reply that concedes the wrong point is difficult to take back.
We read the notice, tell you what it actually means, and handle the correspondence so you are not writing to the IRS on your own.
Sources
- IRS, Understanding Your IRS Notice or Letter: irs.gov, understanding your notice
- IRS, Payment Plans and Installment Agreements: irs.gov, payment plans