IRS Tax Problems

Have You Received a Notice from the IRS? Here's What You Need to Know

William Ray
Have You Received a Notice from the IRS? Here's What You Need to Know

“IRS Official Notice.” 

Nobody wants to reach into their mailbox and pull out an envelope with those three words typed across it. Yet, millions of Americans receive them each year – and for varying reasons, not all of which relate to tax audits, as is a common perception. That's right, not all IRS notices are to notify you of a tax audit. And while most pertain to your filed taxes, reasons for such a notice may also include:

  • A corrected tax return.
  • Verification of your information.
  • Notification about an applied payment.
  • Request for additional information to process your tax return.
  • The IRS has experienced a delay in processing your return and is giving you the courtesy of an update.

Obviously, the latter reason behind an IRS notice is the most ideal, but it's not always the case. And on that note, we've put together this handy guide of what to do if you've received a notice from the IRS.

First Things First

Many people see the three letters “IRS” and go into full-blown panic mode. Let's start right there – just settle down. Remember, not every IRS notice is bad news. So before you do anything, you should stay calm, open the mail promptly and understand what it is the IRS needs or is telling you.

While you'll likely be able to understand what the IRS is asking of you by opening and carefully examining the document itself, there's another way you can gain some clarity. For instance, you'll see a number in the upper right hand corner. This is what's called a “notice number,” and you can visit and match your notice's number with the corresponding section on the website to learn more about the category of your particular case.

After you calmly and thoroughly examine the notice, then it's time to take action.

Taking Action

Although in some cases, a response isn't necessary, you'll have to take action most of the time you receive an IRS notice. Generally, you have 30 days to do so (another reason to open the notice promptly). In some cases, you may even need to seek professional help to get an expert's advice on what exactly the IRS is asking and how you should respond to it. Some responses, however, can be done on your own, especially if it's something simple like verifying your identity or asking for more information on your filing. For other notices, like a corrected tax return or if the IRS detected unreported income, you have to respond either agreeing with the IRS or disagreeing with them. Here's a closer look at each:

  • Agree: If you agree with tax return corrections, all you need to do is basically mail a check with any excess amount that is owed.
  • Disagree: Disagreements are a bit more complicated, and require a written response with an explanation of your stance. To better make your point, it's advised that you include photocopies of any supporting documents. Keep your correspondence with the IRS about any disagreements organized and on hand for quick reference. Additionally, be patient – it may take the IRS up to a month to respond to your dispute. And then the process may start all over again.

In the case you've been sent an audit notice, the first step is figuring out why you're being audited. In some cases, there may not be any red flags with your account and you were selected randomly. After you figure out “why,” you need to figure out “how.” Different types of audits can occur, from you having to mail all of your tax documents to the IRS to IRS workers visiting you on site to conduct the audit. Be sure to gather all of your appropriate documents at the first notice that you're being audited and consult with a professional accountant – or the accountant who filed your taxes – to get a better idea of what to expect, how long the process will take and if there's any real cause for concern.

Preventing an IRS Notice

As we mentioned in the opening, there are times you'll receive mail from the IRS just to update you on the refund timeline. Other notices are the result of mistakes on tax filings. So how do you help prevent a notice?

  • Have a professional do your taxes. Experts who do this for a living are much less likely to make mistakes than those who do it once a year.
  • Never “guess." Always make sure what you're claiming is backed up with documentation.
  • Use a credible tax preparation software that can help walk you through the filing process.
  • Double check and triple check your filing for accuracy.

As you can see, while nobody wants to receive mail from the IRS (other than a refund check), not all notices are bad news. You just need to know how to handle them.

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William Ray

William Ray

William Ray is a specialist in IRS tax resolution problems. His firm, NationStar Tax Advisors, LLC is based in Orlando, FL, but services clients throughout the U.S. NationStar specializes in Wage Garnishment,Bank Levy, IRS Audit Notification, Payroll Tax Relief, and State Tax Problems.

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