By now you have probably already filed your taxes or have already made plans to visit your tax preparer. And while the annual tax return filing may be the closest some will come to corresponding with the IRS, others may not be as lucky. If that’s the case, follow these tips to help eliminate the element of surprise when dealing with the IRS.
Don’t Guess – Know
If you receive mailed correspondence from the IRS, it’s common to read the return address and think the worst, but that’s not always the case. Simply put: don’t assume to know what the letter says. Oftentimes, the letter was sent as a formality to make you aware of a change that was made to your account or to notify you of what the government entity has received or what information it has on file. Instead, open the envelope immediately and read it completely. It’s likely that no further action is needed on your part, but you will never know if you don’t take out the letter opener and dive in.
Establish A Tracking System
When it comes to deciding which letters from the IRS you should keep, we recommend the first one, the last one and all others in between. Furthermore, until the matter is resolved, be sure to keep all correspondence with the IRS in a singular location. You will want to have the ability to easily refer back to them. Each letter will likely offer specific instructions about what is needed on your end to satisfy the inquiry. It’s important to follow the instructions on these letters – even if you need to know how to file an extension to ask for more time to comply.
A Method To The Madness
How many letters you can expect to receive will depend on your specific circumstances. IRS Publication 594, the IRS Collection Process will provide you with some detailed information, but a brief explanation can be found here:
o Acknowledgement – if you issued a response to the IRS’ initial inquiry, the agency will answer back in similar fashion just to let you know that your letter was received and will be responded to in due course.
o Response – when the IRS sends its response, you may receive a request for payment or notification about how the IRS has applied your payment. You may also be notified of a change to your account or of a request for additional information. In short, the notice you receive could cover everything from a general issue about your account or a specific issue pertaining to a tax return.
o Recap – It’s best to keep a written record of all interactions between the IRS and yourself – even if you spoke with a representative over the phone. If you do speak with someone from the IRS over the phone, be sure to carefully document the conversation for your records, including the agent’s name and badge number. Then, request written confirmation of what was covered during the call – just don’t be surprised if it doesn’t actually get sent. Instead, take a proactive approach and type up your own confirmation and send it in to establish a written record of what was agreed to over the phone. Be sure to also include the name of the representative with whom you spoke and their badge number. Then, as always, keep a copy of the letter for your records.
IMPORTANT: If you provide the IRS with proof of some kind via mailed correspondence, do not send your only copy. Remember, you must keep copies of everything for your records, and this includes any and all attachments.
Don’t Be Afraid To Ask For Help
If, at any point during this process, you have questions or concerns, don’t hesitate to call up your tax advisor. He or she can help you determine the best course of action for your specific circumstance.
BONUS TIP: remember that the IRS will never call you out of the blue; even to bring a legitimate concern to your attention. All official correspondence will be sent through the mail. If you receive a call from a person claiming to be from the IRS, you don’t have to listen to what they have to say. Instead, simply hang up the phone and refer to this article for information about how to report the phone scam to the proper authorities.
By Ben Froese, CPA (Wooster office)