Each year, the IRS sends out millions of notices to taxpayers. Some are informational only; others require a response. Not every letter means an audit and, in some cases, the notice you received could have been sent in error. In part because of staffing issues, the IRS is relying more on automation and less on in-person contact. One unintended consequence of this “technology” is that many taxpayers receiving tax notices that are not correct.
If you receive a letter it’s extremely important that you do not ignore it, and responding in a timely manner is critical to getting the matter resolved. Take the letter seriously, and if you question if the letter might be a scam know that there are at least 76 different form letters you can receive from the IRS on a number of topics. If you question the legitimacy of the notice your receive refer to https://www.irs.gov/individuals/understanding-your-irs-notice-or-letter.
It is important to know that any contact by the IRS will be in writing. Phone calls and emails from individuals purporting to be with the IRS are generally part of a phishing scheme to obtain personal information to file fraudulent returns or conduct other identity-theft activities. The IRS will not contact you over the phone; if you receive a call do not share any information. I’ve been told that many times these fraudulent calls are placed from a “202” area code to present the call coming from Washington, DC; don’t let this fool you.
If the letter is from the IRS, here are the steps you need to take. First, confirm that the information on the notice pertains to you. Then, review the notice carefully for instructions and deal only with the specific questions the letter asks. If you have another tax issue (or year) to discuss with the IRS, they will address this in a separate notice. The language in these letters can be confusing, so we recommend to our clients they contact us upon receiving a letter and we handle the response.
Receiving a letter can be a little scary the majority can be resolved in a few simple steps, so try to stay calm. While this probably won’t come as a shock to most people, the majority of letters our clients receive tend to be in error and is a result of the lack of resources at the IRS. Currently,11 the Internal Revenue Service is operating with its lowest budget since 2008, and the prospect of that changing anytime soon does not seem to be a high priority item for either candidate!