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Should I Be Concerned If I Receive a Letter From The IRS?

Should I Be Concerned If I Receive a Letter From The IRS?

Tax filing is a duty required of all U.S. citizens, permanent residents, expatriates, and other qualified taxpayers. While this is certainly not a debt that anyone intends to pay, taxpayers must manage their taxes quickly and correctly. In addition to taxes providing revenue the U.S. government needs to operate, complying with tax returns and paying tax obligations is essential due to the harsh penalties and consequences that can be imposed for failure to pay. Although the fines can start with penalties and interest, they can escalate if the investigator or auditor believes your lack of will to pay has led to tax failure. Therefore, most taxpayers work diligently to ensure that taxes are paid on time and that all obligations are met.

Unfortunately, sometimes taxpayers who think they've done everything right about their tax obligations receive a letter or notification from the IRS. Often the recipient's first inclination is to panic and immediately conclude that they will have to go through a full audit. Panic is rarely a constructive way to deal with the situation, and taxes are definitely no different. If you ever get a letter from the IRS, stay calm and discuss the problem step by step. If you have questions, call an experienced CPA or a tax expert to analyze your situation and provide solutions. 

Not all IRS letters are bad.

Starters need to keep in mind that not all letters and notifications you receive from the IRS are necessarily bad. For example, the IRS may request additional information regarding a limited aspect of the tax return. However, the position taken can be fully justified and supported by evidence. Therefore, after sending the information to IRS, the problem will be resolved. In other cases, a letter from the IRS can even bring good news. In certain circumstances, though rare, the IRS may send you a letter or notice stating that you made a mistake and that the agency corrected it in your favor. It is now true that the reverse can also be true, and a letter from the IRS should never ever be ignored or taken lightly, but immediate panic will not help the situation.

You can determine the subject of the letter using the IRS investigation tool.

Therefore, the first step should be to determine what the IRS is trying to tell you in your letter or notification. Therefore, please read the letter calmly and evaluate its content. However, sometimes the letter can be written very concisely and difficult for a layperson to decipher. Fortunately, the IRS usually relies on form letters that are identified by a code. This code is located in the upper right corner of the letter or notification. It consists of the letters C.P. or LTR, followed by a sequence of numbers. You must write out this code.

Once you find the code, you can proceed to the agency's search tool for private and corporate taxpayers. The tool allows you to type in the letter or code to access a summary of the letter's subject. Individual taxpayers can research the significance of the IRS letters received by accessing and entering the notification letter or code on the Individual Letters and Notifications page. If the IRS letter is relevant to your business, you can search for a summary of the letter using the appropriate business letter and alert finder.

At this point, you should have a basic idea of why the IRS contacted you. In some cases, you will not be asked for anything else. In other cases, the IRS may ask you to provide information about an aspect of your tax return in general. In other cases, the IRS may notify you that you are likely to be a victim of identity theft or that you have unpaid tax debt. Whatever situation you are facing, it is important to handle the situation correctly and on time.

Why did the IRS notify me?

The IRS sends notifications and letters for the following reasons:

  • They change your return.

  • They have a question regarding your tax return.

  • They must inform you of any delay in processing the return.

  • They need more information.

  • They need to verify your identity.

  • You are qualified for a higher or lower refund.

  • You have a balance due.

Once you've got the letter, the steps to take are:


Each notification or letter contains a lot of valuable information, so you must read it carefully. If they change the tax return, compare the information provided in the notice or letter with the original tax return information.


If your communication or letter requires a response by a certain date, there are two main reasons why you should comply:

  • To keep your right to appeal if you do not agree.

  • To minimize the additional costs of interest and fines.


Pay as much as you can, even if you can't pay the full amount owed. You can pay online or request an online payment agreement or Escrow offer. Visit the IRS payment page for more information.

Keep a copy of your communication or letter.

It is important to keep a copy of all notifications or letters with your tax documents. You might need these documents later.

Contact the IRS

The IRS provides you with the contact phone number in the notification or letter's upper right corner. In general, you should only contact the IRS if you do not agree with the information, if they need additional information, or if a balance is required. You can also write to the IRS at the address indicated in the notification or letter. If you choose to write to the IRS, you'll have to wait at least 30 days for their response.

Work with an experienced CPA or tax professional to respond to your IRS request.

If you have any doubts about how to strategically comply with IRS requirements, it is advised to work with a tax professional like TAXES MADE EZ, INC.



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