IRS TAX PROBLEMS – How to Handle IRS Letter or Notice

IRS TAX PROBLEMS – Tips on How to Handle an IRS Letter or Notice

The IRS mails millions of letters every year to taxpayers for a variety of reasons. Keep the following suggestions in mind on how to best handle a letter or notice from the IRS:

  1. Do not panic. Simply responding will take care of most IRS letters and notices.
  2. Do not ignore the letter. Most IRS notices are about federal tax returns or tax accounts. Each notice deals with a specific issue and includes specific instructions on what to do. Read the letter carefully; some notices or letters require a response by a specific date.
  3. Respond timely. A notice may likely be about changes to a taxpayer’s account, taxes owed or a payment request. Sometimes a notice may ask for more information about a specific issue or item on a tax return. A timely response could minimize additional interest and penalty charges.
  4. If a notice indicates a changed or corrected tax return, review the information and compare it with your original return. If the taxpayer agrees, they should note the corrections on their copy of the tax return for their records. There is usually no need to reply to a notice unless specifically instructed to do so, or to make a payment.
  5. Taxpayers must respond to a notice they do not agree with. They should mail a letter explaining why they disagree to the address on the contact stub at the bottom of the notice. Include information and documents for the IRS to consider and allow at least 30 days for a response.
  6. There is no need to call the IRS or make an appointment at a taxpayer assistance center for most notices. If a call seems necessary, use the phone number in the upper right-hand corner of the notice. Be sure to have a copy of the related tax return and notice when calling.
  7. Always keep copies of any notices received with tax records.
  8. The IRS and its authorized private collection agency will send letters and notices by mail. The IRS will not demand payment a certain way, such as prepaid debit or credit card. Taxpayers have several payment options for taxes owed.

 

IRS TAX PROBLEMS – Is an “Offer in Compromise” Right for You?

IRS TAX PROBLEMS – Is an “Offer in Compromise” right for you?

 

An Offer in Compromise allows you to settle your tax debt for less than the full amount you owe. It may be a legitimate option if you can’t pay your full tax liability or if paying your full tax liability creates a financial hardship.

 

However, the Offer in Compromise program is not for everyone. Before the IRS can consider your offer, you must be current with all filing and payment requirements.

 

Unless you have a valid extension, the IRS will return any Offer in Compromise application if your returns are not filed and any required down payment with your application will be applied to what you owe.

 

In addition, you should explore all other payment options before submitting an offer. If you can pay the full amount, you will find payment options on IRS website at “IRS.gov/payments”. If you can pay through a payment plan, you may be able to set it up using our online payment agreement application.

 

Before you take the time to prepare and submit an offer application, or pay someone to do it for you, consider using the IRS “Offer in Compromise Pre-Qualifier”. This simple online tool will confirm your eligibility and provide you with an estimated offer amount.

 

If you decide that an Offer in Compromise is right for you, you’ll find step-by-step instructions and all the forms for submitting an offer in our Offer in Compromise Booklet, IRS Form 656-B. Prepare your offer application carefully, and be sure to include all required forms and documentation. Also, don’t forget to include the application fee and initial payment with your application if necessary.