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What to do after receiving an IRS notice

On Behalf of | Feb 12, 2024 | Tax |

No one enjoys getting a letter from the Internal Revenue Service. Even if you have properly filed your tax returns and paid any owed tax debt, IRS letters are usually associated with bad news, and you may feel confused and anxious.

Do not throw the letter away or ignore it. There are many reasons people receive letters from the IRS and sometimes the reasons are minor and no cause for concern. Sometimes the letter even brings good news, such as telling you that you are owed a larger refund.

If the letter is for a more serious reason, ignoring it is only going to make the situation worse.

Read the letter

Read the letter carefully and make sure you understand what it says. It might simply be asking you to provide additional information, verify your identity or notify you about delays in the processing of your tax return.

Unfortunately, sometimes the letter may tell you that you owe money. This could be because the IRS discovered information about your income or deductions that changes the outcome of a previously filed return and shows you owe additional money.

Respond within any deadlines

Whatever the reason, you must respond to the letter if it gives a deadline to respond. Not responding could have serious consequences.

If you owe money, not responding could tack on interest and penalty fees to the owed amount. The IRS offers various options for paying back tax debt, including offers in compromise and payment plans.

A prompt response to the letter could help you solve the problem with one of these methods that much quicker.

What if I don’t agree or don’t understand the letter?

You may not agree with the amount of tax debt the letter states you owe. You can generally appeal these types of decisions if you file the appeal by a certain date. Missing the appeal deadline could mean you lose your chance to appeal.

Perhaps you are not sure what exactly the letter means or how the IRS arrived at the amount of tax debt you owe. Speaking with a professional can help you learn the reason for the letter and the best next steps to take.