For weeks you stressed over getting your income tax and report of foreign accounts in order. You spent time tracking down W-2s, various 1099s, and other statements of income. You also spent time ensuring that the tax positions you or your accountant staked out were compliant with tax law and well-supported by your books and records. You filed your taxes by April 18, 2017, and believe that you have the right to avoid thinking about taxes for another year. Then, one day you receive a letter from the IRS. Since you had already received your tax return, you immediately dread whatever news the IRS letter may state. You start to consider the potential bad news the letter could contain. Will you face a large unexpected tax bill? A full-scale audit?
If you have received a letter from the IRS, don’t panic. Not every letter is cause for alarm; however, any requests still should be addressed in a timely manner to avoid potential penalties and fines. The tax lawyers of NewPoint Law Group, LLP can assist taxpayers with addressing IRS letters and requests. To schedule a free and confidential consultation to discuss your letter from the IRS, please call the tax lawyers of NewPoint Law Group, LLP at 800-358-0305 today.
Step 1: Don’t Panic and Assume the Worst from the IRS Letter
When a person sees a letter or correspondence from the IRS, their first instinct is often to panic or to simply assume that their worst-case tax nightmare is coming true. Jumping to worst-case conclusions is rarely helpful and may even play a role in transforming a minor request into a much bigger deal. Taxpayers who panic regarding an IRS letter may be tempted to bury their head in the sand and simply ignore it. Other taxpayers may feel like they are on the defensive and act in an anxious or suspicious manner. They may make ill-considered statements to IRS agents that raise red flags. While diligence is good, unreasonable panic is only likely to complicate matters for a taxpayer.
Step 2: Read the Notice
Believe it or not, because many taxpayers panic or go into a premature meltdown upon receiving an IRS notice, it is not at all uncommon for individuals to fail to read the notice. However, the letter or notice sent by the IRS is highly informative and a close reading will help a taxpayer address the IRS’s concerns in a timely manner.
First, the taxpayer should take notice of a code that is printed on every IRS letter or correspondence. This code will correlate to a particular tax topic. Generally, the code will have a prefix that starts with CP or LTR. It is typically located in either the top-right or bottom-right corner of the letter or notice. A taxpayer can plug this code into the IRS look-up tool. For instance, a letter with code CP04 indicates that because you or your spouse served in a combat zone, a filing deferment may be available. Alternatively, if your letter has code CP06, it could indicate that you are facing a tax audit due to potential issues with a claimed Affordable Care Act tax subsidy.
When the taxpayer comes to understand the general area of inquiry, he or she can read the letter carefully to determine the exact reason for the IRS’s correspondence.
Step 3: Handle the Issue or Call a Tax Lawyer for Help
Once you have a good idea what the IRS is asking about, it is time to address their request. In some instances, when a tax filing deferment is available, the taxpayer may not have to take any action. In other scenarios, a taxpayer may face a simple issue – such as a minor overpayment or underpayment of tax – that he or she can handle him- or herself. The exact level of complexity a taxpayer feels comfortable handling alone is a personal decision, but if you do have a question we encourage you to contact a tax professional.
However, in some cases, the taxpayer may realize that he or she made a more serious error or that the IRS has asked about a complex area of tax law. In these circumstances, it is often wise to work with a tax lawyer.
Work with Tax Attorneys in Roseville and Folsom
If you received a letter from the IRS after Tax Day and don’t know where to turn, work with the tax lawyers of NewPoint Law Group, LLP. To schedule a free and confidential consultation with our team, please call 800-358-0305 today. When you call, please have your letter from the IRS handy.