What to do if you receive a notice from the IRS

What to do if you receive an IRS notice

Receiving a letter from the IRS shouldn’t cause undue concern. It’s important to note that not all letters indicate an audit, as many are simply routine and can be easily resolved. If you do receive one, there are a few simple steps you can take to address the matter.

Correspondence from the Internal Revenue Service

The IRS sends out a multitude of notices to taxpayers annually, some of which are purely informative while others necessitate a reply. These notices can be either advantageous or disadvantageous, as they may inform you of your eligibility for a tax credit or of an impending audit, respectively. Additionally, they may notify you of an error on your tax return that resulted in a refund or a balance due, request an updated address, or inform you of your eligibility for the Child Tax Credit. Furthermore, some notices may require you to file an additional form. It is worth noting that the IRS has at least 76 distinct form letters that cover a variety of topics.

Steps to Take Upon Receiving Correspondence from the IRS

Upon opening the correspondence, you may receive favorable news. However, if the news is not in your favor, it is important to take prompt action. Missing the response deadline could worsen your case. It is crucial to remain calm and avoid panic, as it will not reduce your tax liability. Instead, it may immobilize you and result in owing more. 

Address only the specific questions asked in the letter and save any other tax issues for a separate letter. The letter will provide specific instructions on how to resolve the problem, which should be followed carefully. If you are unsure how to respond, the IRS can answer most questions by phone. 

However, for serious issues, it is recommended to put your questions in writing. Some notices may require additional information, with a deadline provided by the IRS. To avoid further action, it is important to meet the deadline. Other notices may advise of corrections to your tax return, which should be compared to the original return. If you agree with the changes, no action is necessary unless a payment is due. If you disagree with the changes, write to the IRS and include supporting documents. Mail the letter and requested documents to the address provided by the IRS, including the bottom tear-off part of the notice. Keep a copy of all correspondence with the IRS for future reference.

Minimizing the likelihood of an IRS Audit

Once the issue has been resolved, it is important to take preventative measures to avoid future correspondence. One effective way to do so is by ensuring the accuracy of your tax return. Negligent errors are likely to trigger an IRS notice, so it is crucial to exercise caution when preparing your return. This involves meticulously checking the mathematical calculations, thoroughly reviewing the regulations, and signing the document appropriately. 

According to 2009 IRS data, the likelihood of being audited is relatively low, with only 1% of all returns undergoing scrutiny. However, certain elements on a tax return can increase the risk of an audit. It is essential to be aware of these red flags:

  1. Consistently reporting losses in a home business. The IRS may perceive this as a hobby rather than a legitimate business venture.
  2. Failing to report income that has been documented on a W-2 or 1099 form. The IRS receives information about your income and expects it to be accurately reported on your tax return.
  3. Claiming a significant amount of itemized deductions. If your deductions amount to $40,000 while your income is only $60,000, it is likely to attract the attention of the IRS.


Did you receive a letter from the IRS and need help? Contact us today at 256-489-1478 or book a consultation here.