What to do if You Get a Letter From the IRS

Everyone’s worst fear is getting correspondence from the IRS. It sends most people into emergency mode, but it does not have to. In this article, we will go over what to do if you get a letter from the IRS.

1. Do Not Ignore the Letter

The worst thing you can do is ignore the letter, it will not make things go away. All it will do is cause issues like additional penalties and interest. You also could subject yourself to collection actions like levies.

2. Carefully Read the Letter

Read the letter carefully and it will explain the issue at hand and provide you with instructions. A common letter many people receive is a CP2000 notice. This is to notify you that there is a discrepancy between what you reported to the IRS on your tax return and the information they have on file. This usually is an income reporting issue.

3. Respond Accordingly

If you agree with what the letter says, follow its instructions. This may involve signing a response form and making a payment. If you do not agree with what the letter states, you will need to pull together documents to support your case and complete a response to submit to the IRS detailing your reasons for disagreement. If you need more time then the IRS provides you with, call the number on the letter and request an extension.

4. Consider Your Payment Options

If the letter you receive states that you owe more than you can pay in a lump sum you can set up payment plans with the IRS. There are short term plans which give you up to 180 days to pay or long term plans where you will make monthly payments. If you are incapable of paying or the payments will cause financial hardship you can settle for less by setting up an offer in compromise.

5. Meet With a Professional

Professionals, such as Enrolled Agents, can help you to respond to the IRS, gather documents, and even represent you before the IRS.

Other Notes

There are some other factors you need to take into consideration if you get a letter from the IRS. First, most letters come with a deadline to respond by, usually 30 days. Make sure you respond within that timeframe. Second, you need to keep records of everything, including your responses. Lastly, be alert for scams. The IRS will not email you. If you receive an email pretending to be the IRS forward it to phishing@irs.gov.

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