A recent client walked in with 15 unopened envelopes from the IRS.  Even though he’d been collecting the notices for a year, he only sought help when the IRS levied on one of his bank accounts.  Turns out he owed $150,000 and the IRS had been announcing what he owed and its intent to seize his assets in all those unopened envelopes.  I was able to help him going forward, but I could not undo the levy.

Once the IRS or FTB gets its money, it is almost impossible to get it back.  I have many clients who ignore the IRS in the mistaken belief that, if they ignore the Tax Man, he’ll go away.  Putting on my parental hat, let me say that he did not make a good choice.  A much better choice would have been to open the letters and deal with them: call the IRS, acknowledge he owed so much money, start a payment plan.   But IRS notices are scary.

Got A Notice?  Don’t Panic!

Most notices can be dealt with through a simple response. But you MUST OPEN THE NOTICE (can you hear me shouting?). It is never a good strategy to ignore the IRS. You will always end up owing more if you don’t cooperate.

Each notice presents a specific issue and provides instructions on what to do. Some notices merely recapitulate what the taxpayer still owes on an installment agreement. Some announce math or penalty changes to a particular year’s tax owing. Some merely want a few supporting documents. Some announce an audit. Other notices threaten enforced collection action, such as lien notices or levies or seizure of state tax refunds.

If the notice just gives you a reminder of what you owe, there is no need to respond.  If the notice announces a change to your tax return, review the information and compare it to the original return. Sometimes the IRS makes a simple math mistake.  If the notice requests information, it’s best to respond. Read here about some of the many notices the IRS routinely sends out.

If it looks complicated, take it to your nearest friendly tax professional to find out how to do so.  I give the same advice for an audit notice.  Some notices announcing enforced collection action give you particular rights. Again, take these to a tax professional to find out what you can and can’t do in response (beyond paying the tax).

And, be alert for tax scams. The IRS uses the U.S. Postal Service, not FedEx or UPS, not Facebook or Linkedin. And the IRS will never  call you first. If you get an unexpected call from a stranger who says he’s from the IRS, it is a scam.

When in doubt, call me or any other tax professional. Sometimes an hour of advice from someone experienced with how the IRS works can save years of hassle.

April 8, 2019

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