How to read a tax notice
Receiving an IRS letter in the mail can be scary and confusing.
The federal government has a variety of tools to collect tax revenues. The first step is the notice you’ve received. DON’T ignore it.
Here’s what to do if you receive a letter from the IRS:
Pause and take a few deep breaths. You’ll need to be thinking clearly to understand what you’re reading.
Verify that it’s not a scam. Bad actors KNOW folks are afraid of the IRS and use this to their advantage. Provide a copy in full to your tax advisor for verification. Look for indication that payment should be made to anyone OTHER than the United States Treasury. The IRS does not currently correspond via text and rarely via email. Any initial correspondence NOT from USPS mail is suspect.
The first page will have several helpful details. What year is the notice for? What type of tax is it for, e.g, Form 1040 personal tax return? When is the IRS looking for a response? Is this letter actually from the IRS or is it instead from a state taxing authority?
Read through the notice carefully. TWICE. What is the underlying issue? Is it an unfiled tax return? A missing tax payment? A late filing or payment? Do you agree or disagree?
If you haven’t yet, provide a copy to your tax advisor. They can confirm your understanding of the notice and develop a response. Response options include filing a tax return, amending a tax return, protesting an assessment, paying an assessment, requesting additional time to formulate a response, and so on. Your optimal next step will depend on a variety of factors including the type of notice, dollar amount assessed, other tax matters you may currently be working through, etc.
Prompt, thoughtful action will maximize the odds that your situation is resolved as quickly and painlessly as possible.