The IRS Letter Playbook: What to Do When You Get Mail That Makes You Sweat

Getting mail is exciting… unless it’s an IRS envelope. Cue instant panic when you see those three letters in your mail! But wait, don’t panic.

There are a million reasons you could be receiving a tax-related letter and they’re not all bad. It could be something as simple as return changes or questions, or just identity verification. So, take a deep breath, open that envelope and let’s walk through what to do with an IRS letter.

Open It, Read It, Deal With It

The anticipation is often worse than what you actually find in the letter, so it’s usually better to get it over with. Open it and find out what you need to do. Before you do anything else, make sure the notice is actually for you. There will be some numbers in the upper right corner that should match your tax return like your social security number and tax year of the return in question.

You can also log into your online IRS account or search the notice on their website. Usually, the IRS contacts taxpayers via physical letter, but you can authenticate the notice through their site. It’s important to do this step so you don’t get scammed by anyone.

Finally, note the deadlines in the letter. Whatever you need to do, the clock is ticking and you don’t want to miss a deadline, since that instantly complicates matters.

The Usual Suspects: IRS Letters You’re Most Likely to See

Certain letters are more likely to be sent than others. So, what types of notice are most likely to show up in your mailbox?

Balance Due Notices

Quite simply, these letters advise you that you owe money to the government. If you ignore this type of notice, you’ll rack up financial penalties and interest, so take care of it as quickly as possible.

Return Adjustment or Change Notices

These notices just mean the IRS has found a mismatch or error in the tax forms and has adjusted the return. You’ll see what the problem was and what the adjusted refund amount is. Usually, you don’t need to do anything if you get this notice.

Income Mismatch Notices

This CP2000-style notice means there’s a discrepancy between what you reported on your tax return and what banks or employers reported. This doesn’t mean it’s set in stone that your return is wrong, but you may need to take steps to prove your numbers are correct.

Identity Verification Notices

In this case, the IRS needs more information to make sure you are who you say you are. They can’t finish processing your return or your refund until this information is provided, so try to complete it in a timely manner. It’s pretty simple and once you’re done, that should be all you need to do. 

When to Tag In a Pro

Simple corrections or an identity check can be handled on your own. You may want to call in an expert though if you are dealing with a lot of money or a big change. If you disagree with the notice, you can also challenge it, but it’s best practice to have a tax pro help you out on that. 

Any time you feel overwhelmed, look to a tax pro, since they’re trained to manage these exact situations.

Need a hand with responding to an IRS letter or help with your tax filing obligations? Contact Ask Anna Tax today for more information.