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Should I ignore those IRS(or FTB) notices?

IRS notice

Oct 12, 2017



Remember those 1099s, W-2s, K-1s and other informational forms you receive each year reporting your interest, dividends, sales, wages, retirement income, IRA withdrawals, health insurance forms and other items having to do with your tax return? Well, the IRS also gets this information and feeds it into its computers. Thanks to modern computer technology, the IRS can match that information to what you reported on your tax return, and if something significant is omitted or there’s a discrepancy with the numbers, the IRS is going to send you a letter asking for an explanation or a tax payment.  You will also receive correspondence if you don’t file a return and the data the IRS has indicated that you should have filed. It has form letters for just about every possible situation.





Do not procrastinate or throw the letter in a drawer hoping the issue will go away. After a certain period, another notice will automatically be produced. And, as you might expect, each following letter will become more aggressive and more difficult to deal with, and it may reach the point where you might have to go to tax court to argue your case or pay whatever amount of money the IRS is demanding. 




Most frequently, these notices will include a proposed tax due, plus interest and/or penalties, along with an explanation of the examination process and how you can respond. However, the letters must, by law, advise you of your rights and other information. Thus, these letters can become overly long and are sometimes difficult to understand. That is why it is essential to have a trained eye review them before you take any action.


Most importantly, don’t automatically pay an amount the IRS is requesting unless you are confident it is correct. Quite often, you do not owe the amount being billed, and it will be difficult and time-consuming to get your payment back.





Note that these “love letters” from the IRS will come by regular mail, not email. If you receive an email from someone claiming to be from the IRS and demanding a tax payment, this communication will be a fraud, since the IRS does not use email for this purpose.


Taxpayer Advocate Service (TAS) is an independent organization within the IRS. Check out the resource from TAS first. A lot of times, there are simple ways to clear the notice without much trouble.





It is always good practice to have a tax professional review the correspondence and respond to the IRS promptly. At Virtual CPA For You, clients are advised to send me all notices from IRS/FTB. I will handle them on their behalf and clear any issues quickly. Since we have a virtual tax preparation practice, there is no waiting, no need to take a day off to meet your CPA, just send me a copy of the notice, it will be taken care for you.

Circular 230:The articles are for general information only. In accordance with IRS Circular 230 they are not considered tax opinions for purposes of relying on such statements in any challenge of the reporting of the above transaction by the IRS. If a full tax opinion is required certain procedures must be met . Also there is a significant cost for a full tax opinion to meet the requirements of Circular 230.

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