Panic is an understandable and obvious reaction when one receives a letter from the Internal Revenue Service (IRS). However, you shouldn’t remain anxious since this type of correspondence can also mean that you’re getting that much-coveted refund.
A letter from the IRS can mean a lot of things. Nonetheless, it doesn’t merit an exaggerated response since government agencies usually send formal correspondence by post.
Here are the things that you should do if you received one today:
- Read It Thoroughly
You must keep your cool and stay level-headed as you open the letter so that you can understand its content. Each notice contains the information that you need to respond appropriately, so you must read through the entire thing with all consciousness.
The IRS can send you a letter if you have a balance due, or there are changes to your refund. The government agency will also mail you if they have a question or changes regarding your tax return, such as delays in its processing. Other times, an IRS letter can be a means for identity verification, especially if they need more information.
As mentioned above, this type of mail can have different definitions. You must be aware of the different IRS notice letter meanings. With this, you’ll know what’s expected from you now that you’ve read and understood the information that has been sent to you.
- Figure Out What To Do
Generally, a notice from the IRS will instruct you whether they require a reply or not. Taxpayers don’t need to respond to the letter unless it’s explicitly mentioned in its content.
If the letter tells you that you owe the government, you should reply with a payment. Check the documents that you submitted and see where you might have missed out on a legal obligation. It’s actually a common mistake by freelancers and those who are self-employed, such as landowners who rent out their homes.
Fortunately, you can pay what you owe the government directly through your bank account, as well as through debit or credit cards. The IRS has also set up alternative methods, such as through their electronic federal tax payment system, money transfers, checks, or paying with cash through their retail partners.
- Respond Timely
On the other hand, if the notice does contain a specific date on when you should reply, you must comply promptly. You shouldn’t ignore any letter from the IRS, and you also mustn’t procrastinate in responding to their request.
There are two primary reasons that you should reply promptly to a letter from the IRS:
- Save Money – The government rewards taxpayers who comply with the notice in a timely manner by minimizing additional interest and penalty charges. This factor should already be a significant incentive for people to take note of the tax obligations they overlooked. It’s highly likely that you’ll only have to pay for the amount stated in the letter if you reply promptly.
- Keep Your Right – Meanwhile, you might disagree with the notice and have evidence that you were able to comply and complete your tax filing accurately. Replying promptly can preserve your appeal rights during disputes. Otherwise, your objection might be null and void if it’s delayed.
For disputes, you must explain in your reply why you disagree with the notice. Additionally, include the information and files that support your claim so that the IRS can review them. Give the agency about a month to respond to your objection.
- Make Copies Of The Letter
After you’ve decided on a course of action, whether through payment, a reply, or both, you should keep the original letter, as well as make a few copies. This practice is an excellent way to monitor your taxes so that you can calculate the amount accurately, so you’ll be sure that you can pay the right sum to the IRS.
Organizing your files will also make the annual tax season painless for you and your accountant. Plus, you might need the evidence in the future that you were able to comply with all of your tax obligations, which is a good habit to cultivate.
Conclusion
Getting a letter from the IRS is nothing to panic about. It’s just standard protocol for government agencies to send formal correspondence through the post. The first thing you should do upon receiving the notice is to read it thoroughly because it contains all the information you need to comply with the government agency’s letter.
Next, you must figure out what to do. If the notice requires a payment, response, or both, you ought to take action promptly. Lastly, make copies of the letter and store the original in a safe place since you might need to refer to it in the future.
