Tonight is All Hallows Eve. The night air is filled with the sound of ghost and goblins going about their mischief, and the howls of werewolves echo through the trees. You are sitting in your easy chair reading the story of the Headless Horseman, when you hear something on your front walk. You peer out your window, and see one of the minions of the undead slowly dragging a large bag behind him. He creeps up the front stairs and stops in front of your door. With long fingers, he reaches into his bag and pulls out a long white envelope. He reaches up with a trembling arm, opens your mailbox, and drops it in. He turns without a word and slinks back down the walk. When he is out of sight, you open the door, and tentatively reach into your mailbox. What could this be? You look at the envelope, and your worst fears are realized.
It is a letter from the IRS! Oh the horror!
Besides opening the letter, of course.
The first thing is to keep in mind that the letter doesn’t necessarily mean you are going to be audited. It could be that they need some more information, a payment is due, or that there were changes to your account. Every time the IRS contacts you, they will include information on what you need to do based on what the issue is that is mentioned in the letter.
Also, please know that the IRS only sends notices by mail. If you get an email from someone saying they are from the IRS, do NOT follow the instructions in the email, and contact the IRS to let them know about the email by sending the email to email@example.com.
The letter might contain some type of correction to a tax return you had filed. Take a look through your tax return and see if you agree with the explanation for the correction that the IRS has given you. If you agree with the correction, there is nothing you need to do unless a payment is due or there is some other action that the letter is directing you to take. If you do not agree, send a reply letter to the IRS to the address in the upper left hand corner of the notice with an explanation of why you do not agree, along with any documentation supporting your reasoning. There should also be a portion of the notice that needs to be torn off and returned to the IRS with your correspondence. It usually takes at least 30 days for the IRS to respond to correspondence from notices. Be sure to keep copies of anything you send to the IRS. I’d also send it certified mail so that you get a note back that the packet you sent was received.
If you look over the correspondence, and have questions, there is a telephone number in the upper right hand corner of the notice that you can call to have your questions answered. Before you get on the phone, be sure to have your tax return and supporting documents in front of you so that you can get clear on what needs to be done.
Notices from the IRS are nothing to be feared (unlike zombie, vampires, and werewolves). If you keep your head about you, keep good records, and understand the issues, you will be ok. Still, if you look over everything, talk to the IRS and still have issues, find a good CPA to help find a way to appease the IRS and regain your peace of mind. It’s a spooky enough time of year, after all!
Chris Peden, CPA, CMA, CFM has over 15 years in the corporate world helping companies meet their regulatory compliance requirements. He also assists small business owners with organizing and making sense of their finance information. You can reach him at firstname.lastname@example.org. In accordance with Circular 230 Treasury Department Regulations, we are required to advise you that any tax advice contained in this article may not be relied upon to avoid penalties under the Internal Revenue Code. If you are interested in a written opinion that can be relied upon to prevent the imposition of tax-related penalties, please contact the author.