Now this may seem obvious, but the first thing to do when you receive a letter from the IRS is to OPEN it. Take a deep breath and open the letter.
Letters Have Due Dates
Letters from the IRS have due dates. It is important to figure out what they are requesting or telling you as soon as you can so you can have ample time to respond. Sometimes there is no response required. A simple change of address, for example. Sometimes they are requesting documents or holding up a refund for more documentation.
I had two clients send me copies of letters they received that showed the IRS calculations and our calculations side by side. They were exactly the same. Obviously, there was nothing for us to do but to file the letter for safekeeping.
Of course, there are letters that are more serious. Some letters inform taxpayers that the IRS has taken out liens or plans to levy them.
During the year of COVID-19 and while distributing stimulus payments, the IRS refrained from aggressive collection action. But, as of this June, letters are being mailed.
Let us Know
If you need help making sense of an IRS letter, please let us help. In fact, if my clients receive letters, I want to be the first person they call.
Another issue brought on by COVID is that any correspondence mailed to the IRS is either just now getting processed or is waiting to be processed. They were understaffed and hit hard by the pandemic the same as the rest of the US. You may have realized this when you called the IRS and received what they are affectionately calling a “courtesy disconnect.” That is when they tell you to call back later and then hang up on you. You are not alone. They hang up on me, too.
State Issues-what to do
Letters don’t just come from the IRS, but they can and will come from the states as well. Many times, even if the IRS has amended your return for you, there is an obligation to amend the state returns to match.
Can there be good news?
The good news is that there are solutions to tax problems.
If you have missing tax returns or old taxes that just won’t go away, call our office. We can prepare tax returns from older years and help put together a strategy to get past it. Just today I had a client in my office who had finally paid off several years of old taxes. I wish I could convey the sense of relief and freedom he felt. I felt it, too.
Our office is able to put together a comprehensive report of your tax history. We can help you formulate a plan.