The Internal Revenue Service is one of the monolithic government entities that most people are happy to give a wide berth. Opening your mailbox one morning to find a letter from them can elicit some nerves – if not a full on cold sweat.
As we’ve said before, being audited by the IRS is the stuff of nightmares. Not every letter from our friends at The Department of the Treasury means grave misfortune, though; it could be as harmless as requesting information or clarification. Keep your wits about you and follow this checklist of how to handle the situation.
Know what to expect
The Internal Revenue Service sends millions of letters to people all over the country for dozens of reasons. These are steps to take if you receive a communication from them:
- Don’t panic – First and foremost: don’t panic. Not every letter means you have acted inappropriately and should expect an audit. Stay calm and carefully read their instructions.
- Don’t ignore – Do not ignore the letter either. The IRS sends these letters because you need to be notified of something. Ignoring their request may lead to major problems down the road.
- Do what they ask – Your letter will include specific instructions on how to proceed – follow them. Not doing so may lead to penalties or forfeiting credits.
- Take notes – Be sure to compare any discrepancies the IRS points out with your own records. Be sure to also add the letter itself to your important documents.
- Know when to respond – You should only respond if your notice tells you to, requests payment or if you wish to dispute something. If the IRS is asserting something you think is incorrect, speak to a tax attorney to learn your options.
- Respond by mail – It may be counterintuitive in the digital age, but the best way to respond to the IRS is by mail. If a call is necessary, the number should be on your notice.
- Don’t be scammed – There are scammers that try to learn people’s tax information by posing as the IRS. Remember that first contact will almost always be a letter, and never via social media or a text.
These are straightforward steps that can resolve most instances in which the IRS contacts you. If you are being audited, remember that they happen more often than you may think and could be resolved by simply explaining your side.
Always be honest when dealing with the IRS and the government at large. Keep good records and hold onto important documents – in the instances that the government may contact you, it will make getting through the process much quicker and easier.