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Video: Steps to Take When you Get an IRS Notice

Updated for Tax Year 2014


OVERVIEW

When you receive a notice from the IRS, do not panic. Read the notice and then watch this video to find out what to do next.


Hello, I’m Tammy from TurboTax, with important news for taxpayers who receive a notice from the Internal Revenue Service. It’s understandable that you may be a little nervous when you find a letter from the IRS in your mailbox. But in most cases, receiving a notice is nothing to be alarmed about. In fact, it may even be good news.

The first thing you should do with any IRS notice is to read it carefully. The IRS will always be precise in its correspondence— meaning it will only contact you for a specific reason, which it will thoroughly outline in your notice. One possible reason for your notice—which is very common--is to explain some type of error the IRS found on your tax return and to inform you of the proposed changes. But remember, the IRS will make changes to your return even if it increases your refund.—but you should keep a copy of the notice with your other tax documents.

There are situations, however, when the notice you receive increases the tax you owe. Commonly, the IRS will send notices to taxpayers if their tax return doesn’t match the information the agency has on file—such as the 1099s and W-2s it receives. In this case, the notice will provide you with the information you originally reported on your return as well as the changes the IRS is proposing.

If you receive this type of notice and disagree with the changes, it’s important that you contact the IRS within the timeframe noted in the letter. For example, suppose you forgot to include some income from one of your 1099s. If you acknowledge the mistake and agree with the additional tax, you can simply detach the response page of your notice and mail the additional tax payment.

But if the 1099 was created in error—meaning you never received the income reported on it, you need to respond to the notice. Your response can be as simple as a telephone call, but for more complex situations requiring the submission of documents to the IRS, you can draft a clear and concise explanation and attach copies of your documents to it.

And remember, the one thing you should never do is ignore your IRS notice. For most tax problems, there is usually a simple and painless solution. If you used TurboTax to prepare your tax return, you’ll have access to our free Audit Support Center. In it, you’ll find examples of common IRS letters and instructions on exactly how to respond.

 

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The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.

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