There are few things that people dread more than a notice from the IRS. Every year, the IRS sends millions of IRS notices, most of which are met with panic. People are so likely to comply with an IRS claim that these are even the subject of many scams and cons.
Facing an IRS Notice
The first step to facing an IRS notice is to simply open the letter. Don’t file the letter away or throw it on a stack of mail; open it immediately. In some cases, the unwanted envelope contains notice that the IRS received documents or other mundane announcements; in this case, worrying and procrastination will be unneeded stress. In cases where there is a dispute or a bill to be paid, time is of the essence. If you believe that the letter is asking you to pay a bill or otherwise take action, contact a CPA immediately to assist you with the proper handling of the notice and represent you before the IRS regarding the notice.
Documenting Your Case
If you and your advisors feel that the request is fair, follow instructions. Always keep paper copies of communications with the IRS, including any documentation that you send. Never send your only copy of a document. If you need extra time to respond, ask for an extension. In all but a few cases (such as a Notice of Deficiency), you can get an extension that will give you time to prepare a response or a case. Remember that everything you do involving the IRS should be documented in writing. Phone calls are not proof.
The IRS Makes Mistakes
In some cases, the IRS is simply wrong. You should not accept culpability if you believe they are incorrect. Compare the letter with your own documents to be sure it contains accurate information. In many cases, there are mismatches or other failures to communicate that can be easily resolved. Only agree with their claim if you truly feel it is accurate. If you do not agree, tell them in writing (politely and professionally!) why you disagree.
Getting an IRS notice is best dealt with quickly and methodically. If you are confused or worried about the process, talk as soon as possible to a CPA.
