What to Do After the IRS Contacts You

You open the mailbox, sort through your mail and toss the junk aside. Then, in big bold letters, you see the three scary letters – I-R-S. Last year, more than 1.6 million taxpayers received similar notices from the IRS.

While most notifications are due to math errors, 1 million U.S. taxpayers were audited last year. The chance of an audit is unlikely, but it is important to understand what actions you should take when you are contacted from the IRS.

Take Action Immediately

If you receive a letter from the IRS, open it immediately. It should spell out the issue and provide the required response date. If you work with a CPA or tax preparer, bring the notice to their attention. They should be able to help you determine the appropriate plan of attack.

If you do not have a pre-existing relationship with a CPA, a notice from the IRS is probably a good reason to begin one. Responding to a notice is a detailed process, and going in blind could worsen the problem.

Some notices do not require a response or action at all. For instance, a Notice CP 49 informs taxpayers they have overpaid on their taxes and where the overpayment will be applied.

Maintain Your Records

When you receive a notice from the IRS, it is important to keep a record in a well-organized location along with other relevant financial documents. You might need to reference information from the notice in the future, or provide supporting evidence such as W-2’s and receipts of charitable donations to prove your case.

Having well maintained records can also aid in the discovery of errors such as misspelled names, wrong Social Security numbers, or other mistakes which could have caused the unexpected notice.

Beware of Scams

If you receive a phone call from the IRS, proceed with caution. We have witnessed a significant growth in the amount of scam phone calls from individuals who are trying to trick taxpayers into sharing private information.

The IRS has a rigid process for how they handle tax issues. “The IRS respects taxpayer rights,” said IRS Commissioner John Koskinen.   “Angry, shake-down calls are not how we do business.”

The IRS will never call to ask for an immediate payment, or request payment without having mailed a bill prior. If the IRS is requesting payment, the taxpayer is always given the opportunity to question and appeal the amount, and will never be asked to pay via a credit or debit card over the phone.

If you happen to get one of these scam calls, you should report the call to the Treasury Inspector General for Tax Administration at 1.800.366.4484.