There are many reasons you might get a letter in the mail from the IRS. The IRS says on their website: “Don’t panic.” We agree; however, that doesn’t mean you won’t worry. So we’re here to calm those nerves and give you some direction on what to do when you get a mailing.
The most important thing to know about your letter is don’t ignore it!
Here are three main types of letters you might get:
1) You are Being Audited
This can come in two forms. The letter might tell you that they’ve made an adjustment to your return and give you the balance owed, along with the penalties and interest added to the balance. The code at the top right hand corner may be CP-2000, CP-11, 21, or 22. You will be given 30 days from the date on the notice to submit your payment. If you disagree with the payment amount, you should write to the address or call the number on the notice to discuss it with the IRS before the 30 days runs out. If you can’t pay, you should contact the IRS as well. If you get a CP-12, that means you have overpaid your tax after the IRS made an adjustment and have a refund coming to you.
The other type of audit letter is a 566GC notice. This is informing you that your return has been selected for a traditional audit where a field agent is assigned to review your case. You will be required to provide financial information as directed in the letter within 30 days of the date on the notice. You should do this as soon as you can. If you are unable to meet the deadline, contact the person whose name is on the letter to ask for an extension of time.
2) You Have Missing Tax Returns
If you haven’t filed a tax return for any given year and the IRS sees that in its system, it will send you a notice. There are many types of these, all saying the same thing: that you need to file your return within 30 days. By filing your return, you may get a refund back that was due to you. Also, you will start the statute of limitations running when you file, so that’s a good reason to file even if you can’t pay the balance due on time.
3) You Owe Money
There are many kinds of letters you will receive if you owe money to the IRS. (Click here for more information on what you should know if you do owe money.) If you ignore these letters, each one gets more aggressive as the IRS proceeds with its collection efforts against you. The IRS is required to give you certain notices before it can garnish your wages or levy your bank accounts. All of these notices are important. Once you get something sent to you by certified mail requiring pickup at the US Post Office, things have gotten very serious. At this point, the IRS is ready to get into your accounts and wages. You cannot simply not pick up the letter because the IRS never has to prove that you didn’t actually see the letter. It just needs to have mailed it to you.
If you owe over $10,000, the IRS will also send you a letter telling you it plans to file a lien in your name. This gives the IRS the ability to collect from any sale of assets you have, and it affects your ability to get credit.
All of these mailings include certain appeal rights and opportunities for you to dispute the amount owed or to protect yourself against unreasonable collection action. You need to pay special attention to deadlines so you don’t miss your opportunity to protect yourself. If deadlines come and go, you may no longer have a chance to convince the IRS that you don’t owe the money or that you can’t afford to pay.
We realize receiving a notice from the IRS can be very unnerving. But, if you respond promptly or get professional help right away, you can avoid bigger problems later and resolution can be straight forward and easy.