How to Handle IRS Notices Without Stress

Receiving an envelope from the "Internal Revenue Service" can quickly turn a good day into a stressful one. Even those who meticulously maintain their tax records and comply with tax rules may experience anxiety upon the arrival of an IRS notice.

Rest assured, most IRS notices are not emergencies. Many are routine communications that can be addressed efficiently with the right approach.

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Before you worry, take a deep breath. Understanding the notice will guide you to an effective resolution.

Reasons for IRS Notices

The IRS dispatches millions of notices annually, typically for reasons such as:

  • Mismatch Issues
    The IRS may receive form data (such as a 1099 or W-2) that doesn’t align with your submitted tax return. This triggers an automated notice — not an accusation.

  • Information Clarifications
    Occasionally, a figure is unclear, a form is missing, or a simple error prompts further inquiry. These are generally minor issues to resolve.

  • Payment Discrepancies
    A payment may have been applied incorrectly, submitted late, or mismatched with your return figures.

  • Account Adjustments
    The IRS might update credits or deductions, or recalibrate a refund.

  • Identity Verification
    Increased fraud protection measures may require you to confirm your identity. These notices are typically informational, not confrontational.

Professional Guidance is Key

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Reacting hastily to an IRS notice can complicate matters. Avoid:

  • Paying any noted amount immediately

  • Calling the IRS without advice

  • Sending documents without explanation

  • Ignoring the notice completely

These reactions may exacerbate the situation. Instead, consult with your financial advisor to:

  • Verify the notice's accuracy

  • Determine if any payment is truly due

  • Identify potential IRS errors

  • Assess whether the issue is straightforward or requires representation

  • Gather necessary documentation for response, if needed

  • Decide if a response is necessary at all

Facilitating calm resolution often involves interpreting IRS codes, such as:

  • CP2000Underreported Income. This indicates a discrepancy between reported and received income, usually due to delayed or incorrect vendor submissions.
  • CP14Balance Due, which requires assessment as it may arise from timing issues.
  • CP75Audit Documentation Request. This is a straightforward request for proof of credits or deductions.
  • Letter 5071CIdentity Verification, part of fraud prevention measures.
  • Notice of Intent to Levy (LT11/CP504), which, while serious, can still be managed professionally.

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Avoiding Common Mistakes

A deliberate, well-informed response typically resolves the situation smoothly. Steer clear of pitfalls like:

Ignoring the notice. Deadlines are crucial.
Contacting the IRS prematurely. Consulting with a professional first ensures informed decisions.
Blindly paying the addressed amount. The balance might be incorrect.
Sending documents without context. Proper interpretation and clarity are paramount.
Remember, most notices do not signify an audit.

Resolution Steps

  1. Consult your financial professional with the notice in hand.

  2. They will review your return and IRS records to identify discrepancies.

  3. They'll confirm if the IRS is correct or mistaken.

  4. They'll guide you on the appropriate response or advise no action if required.

  5. If payment is due, ensure accuracy and proper application.

  6. If the IRS is incorrect, a detailed explanation and documents are prepared.

Most issues can be resolved with minimal correspondence.

Why Engage Professional Help?

IRS notices might seem daunting, but accounting professionals deal with them routinely. They excel at:

  • Deciphering IRS coding

  • Reconciling notices with tax records

  • Detecting IRS errors

  • Correcting payment application errors

  • Effective IRS communication

  • Escalating issues when needed

  • Judging when to simply refrain from responding

Above all, they provide reassurance and expertise throughout the process.

If You Receive an IRS Notice, Seek Assistance

If you have received an IRS notice, whether unclear, concerning, or unexpected, reach out to our firm. We’ll thoroughly review it with you, clarify its implications, and guide you to a proper resolution.

No stress. No assumptions. Just expert guidance and a direct path to resolution.

Ready to leap?
Our team is standing by to help!
Reach out now
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