You sit down to open the mail, and there is that letter. It is from the Department of the Treasury, the Internal Revenue Service. Your fingers tremble a little, and your mind races as you open the envelope. What procedures should you follow in taking care of the letter? Is panic an appropriate response?
Take a deep breath.
Remember, not all letters from the IRS are bad news. A good first step is to sit back, take a deep breath and think positively. Perhaps this notice is to tell you that you overpaid your taxes last year and you will be receiving a refund. - Actually, there are several possible reports of good news that you might receive. Yes, it is also true that the letter may be an order to appear for an audit. If you have provided accurate information to your tax preparer for the preparation of your taxes, and your tax situation is not subject to difficult interpretations of the tax law, it is likely that there will be little or no change in your tax bill.
Look at the notice.
Now that you have gotten over the initial shock take a few moments to look at the notice. Make sure your name and address at the top of the page are correct. Check the line at the top, which identifies the Form. Most often this will be Form 1040, 1040A or perhaps 1040X, but you may have filed other returns, especially if you are involved in an estate or a trust. Whatever that Form number is, it will identify the particular tax return involved. Look for the "Taxpayer Identifying Number" at the top of the page. If this is a 1040 type personal tax return, that number should be your social security number or your spouse's social security number. The body of the letter will explain its purpose and will often have facts and calculations documenting a proposed assessment or refund. You may prefer to compare the numbers on the notice to those on the tax return, or you may simply prefer to let your tax preparer handle it from there.
Get a copy of the letter to your tax preparer!
Get a copy of the letter to your tax preparer as soon as possible. After reviewing the letter, he/she will either contact you with an immediate course of action, or research the issue and then discuss with you options to resolve the issue. Sometimes a simple phone call to the proper person at the IRS can resolve the matter. It is most important that you get the letter to the tax preparer immediately. Often the letter contains a time limit for reply or for stated actions to take place, and he or she may need the time to prepare a response for you. Taking care of these notices in a timely manner can help avoid or reduce penalties and interest. Many tax preparers can relate stories of clients who come in for their annual appointment with one or more, either opened or unopened envelopes from the treasury department. The story is often something like, "I knew this had something to do with my taxes so I just threw it in my folder of items to bring in to you.
Everyone experiences a certain amount of discomfort in the process of receiving a letter from the IRS. Remember the notice is often not bad news, and there is help available. We are here to help you, either by crafting a written response, or by dealing directly with the appropriate IRS personnel.
