10 Tips for Dealing with IRS Notices
The IRS sends out thousands of notices and letters each year for a number of reasons. Here’s some guidance from our Michigan tax lawyer, Venar R. Ayar, on ten things you should know about IRS notices in case you should receive one. The list of IRS notices could go on and on. Some are friendly reminders and some can be threatening. Pay attention to what they say. The main thing to remember—do not ignore it. If you receive a notice and do not act accordingly when something is requested of you, you will get more notices and they will become more threatening.
Types of Notices
Notices come in many forms. Generally, the IRS will send a notice if they believe you owe additional tax, are due a larger refund, are missing returns, notices regarding an audit, notice of reviewing and more. Balance due notices are sent to try and collect a past-due tax you owe to the IRS. After the first notice, they inform you that you may set up an installment agreement if you cannot pay in full. You may appeal with the help of an experienced Michigan tax lawyer. If you received a collection notice, it is important to respond early on in the process. The longer you ignore the notices for, the more aggressive the IRS will get, and the more difficult (and expensive) it gets to address the problem. Eventually, they may levy your bank account and/or garnish your wages to collect on your tax debt. In the most extreme cases, the IRS will go as far as seizing your personal assets, such as your car, or foreclose on your house. Besides getting on an installment agreement, there are numerous other alternatives to dealing with IRS back taxes.
Read More: IRS Tax Debt Relief
Some notices are sent because the IRS believes there are errors on your tax return. These are generally called IRS audit notices. Some of them refer to simple math errors, proposing a correction. Others are more complex and signify the start of a full-blown IRS audit. It is important to respond to these notices in a timely manner, otherwise the IRS can and will adjust your tax return, reducing your refund or increasing your tax due.
Read More: IRS Audits.
See Also: Audit Defense Strategies.
Missing return notices mean that you have not filed your return. Sometimes they are sent because the IRS believes you are due a refund and the time limit to claim your refund is running out. More often, they are sent because the IRS has reason to believe that you owe tax, and they want you to file your returns. If you receive a missing return notice, it is important to file the return in question in a timely manner, otherwise the IRS will file it for you without giving you any deductions or credits, resulting in the highest possible amount of tax due.
Read More: Un-filed Back Tax Returns.
There are also late-filing penalty notices and estimated tax penalty assessment notices, along with much more. The main tip to remember is to focus on the underlying issue – the reason you a receiving a notice. For every type of IRS notice, there is a corresponding Michigan (State) tax notice. Like the IRS, the State of Michigan has its own set of notices for: back tax debt, audits, and missing returns. Although the process for responding to MI State tax notices is generally similar to responding to the corresponding IRS notice, it is important to note that the MI Department of Treasury and IRS are two separate and distinct entities, and that each has their own policies and procedures that must be followed to get the best possible results.
Tips For Dealing with an IRS Notice (or State of Michigan Tax Notice)
1. Don’t worry. Many times, the notice calls for a pretty simple response.
2. If you receive an IRS notice, it could be for a number of reasons. Typically, it will cover a specific issue about your tax return or account. IRS correspondences may notify you of changes to your account, require payment or request more information.
3. Follow the instructions. Each IRS notice offers specific guidelines on how to comply with what they ask. If you have any questions or concerns about your notices, you should contact a Michigan Tax Attorney to discuss the issues. It is important to get your response right the first time, so ask about anything you are unsure of.
4. If you get a notice that says the IRS has corrected your tax return, you should review the correspondence and compare the information with what’s on your return.
5. If you agree with a correction made by the IRS, then usually no reply is necessary—unless you are directed otherwise or a payment is due.
6. If you do not agree with a correction made by the IRS, it is imperative that you respond as requested. I would suggest a written explanation of why you disagree. With your response, you should include any information or documents you want the IRS to consider. Mail in your reply with the bottom tear-off portion of the IRS notice to the address shown in the upper-left hand corner. The IRS could take at least 30 days to respond.
7. You might be able to resolve simple issue in your notices on your own. This means no calling or visiting the Michigan IRS office! If you have any questions or concerns about the subject of, or response to, your IRS notice, you can call the IRS to ask them yourself or contact a local tax attorney to discuss your situation and the best way to handle it.
8. Remember to hold on to copies of any notices you receive with your other income tax records.
9. The IRS sends out letters and notices through mail. You will never see an email from the agency about your tax account or tax return.
10. If you are seeking more information about IRS notices and letters, visit the IRS website, or get in touch with your Michigan tax attorney. Remember, the best way to deal with these IRS notices is to deal with the underlying situation right away. It’s quicker, easier and saves you money in the long run. If you don’t understand a notice, consult your Michigan tax attorney to better deal with your IRS notice.
For more information, feel free to give us a call, or send us an e-mail here. [author] [author_image timthumb=’off’]https://www.ayarlaw.com/wp-content/uploads/2013/02/venar-about-sm.jpg[/author_image] [author_info]Michigan tax lawyer, Venar R. Ayar, founder of Ayar Law Group, holds ten years of experience as an accounting specialist and tax lawyer. He earned his Juris Doctor at the University of San Diego School of Law, receiving a Master of Laws in Taxation—the highest degree available in tax. His main focus has become Michigan tax resolution as well as IRS tax resolution, including individual and business tax matters; tax planning, tax compliance and white-collar criminal defense. His business background has helped him to become personable and understanding in his work. Representing clients before the IRS, Ayar’s practice and experience has proved him as an honest and dedicated leader in the realm of Michigan tax lawyers. Click here to contact your Michigan tax lawyer, Venar Ayar. [/author_info] [/author]
Latest posts by Venar Ayar (see all)
- Tax Audit Red Flags (Part One) - December 11, 2018
- What Is a Notice of Intent to Offset? - November 14, 2018
- What to Do When You Have Several Years of Unfiled Tax Returns - November 13, 2018