What Should I do with an IRS Letter?
The IRS sends many types of letters. Some IRS letters don’t require any action on your part while other letters do require action and have deadlines. IRS letters shouldn’t cause alarm, but IRS deadlines should not be taken lightly.
In this article, find out what you need to do when you receive an IRS letter.
I recommend keeping all IRS letters and notices, even if you don’t see an obvious need to keep them.
The address the IRS uses to send letters is the one you provided on your last tax return. If you move, even if you have mail forwarded, often IRS letters are NOT forwarded. So it is a good practice to update your address with the IRS when you move in between tax filings.
Here are some basic steps to take when you receive an IRS notice or letter:
1.) Read the letter and figure out what action, if any, is required.
Some letters don’t require any action and are provided for information. The direction provided in letters that do require action is usually clear.
2.) Determine if the letter is fake.
The IRS starts communicating with individual taxpayers through letters, but there are scam letters out there.
Here are some tips on identifying fake letters:
- IRS letters will have an identifying number starting with “CP” or “LTR”. You can look up these numbers at the Taxpayer Advocate Service website.
- IRS letters will not require you to pay through a specific method. The IRS does NOT demand immediate payment. The IRS does NOT accept payment with gift cards, prepaid credit cards, or wire transfers. IRS accepts payments electronically through specific vendors, but go to IRS.gov to find those vendors. A check payment should be paid to the U.S. Treasury.
- The IRS does NOT threaten taxpayers with arrest or jail or law enforcement if they don’t immediately pay.
- The IRS does NOT demand payment without the opportunity to appeal.
- Look for the usual signs of scams such as poor grammar and poor spelling.
- If you are unsure, call 1800-829-1040 to confirm the letter is real. You can also consult your closest tax office. And in some cases, you may be able to confirm information in the letter in your online tax account.
- If you do determine the letter is a scam, please report it to the IRS and to the Federal Trade Commission (FTC).
3.) Determine if you need to respond or if other actions are needed.
Make sure you understand what the letter indicates and the options it offers you. In some cases, if you agree with the letter, you have no further actions, but in other cases, the IRS wants you to respond – even if you agree with the letter. If you aren’t certain what you are supposed to do or if you don’t understand the situation, call the IRS for some assistance at the number indicated in the letter or at 1-800-929-1040. The Taxpayer Advocate Service has a tool that can help you understand letters called “Did you get a notice from the IRS?”
Ultimately if you aren’t comfortable dealing with the IRS letter on your own, it may be time to consult a tax professional. But don’t forget, if your tax software or tax professional provided some kind of guarantee or audit protection, that may be the place to start with getting professional help.
4.) Determine if there is a deadline to respond.
Often there are deadlines for a response and for any actions. In some cases, a deadline can be extended, and sometimes a response can help you get more time. The important thing is to not ignore a deadline because the IRS will move on to the next step. Later steps typically result in more costs for you.
Types of IRS Letters
1.) Information Letters
Information letters simply provide you with some information that may be useful for you. Some examples:
- If someone accesses your online account for FAFSA information (requesting federal student aid), the IRS will send you a letter. If this was you, then no problem. If it wasn’t you, then you may be a victim of tax identity theft.
- Letter 6149. This letter informs you of the total you received for Advance Child Tax Credit Payments. You’ll need that total for your 2021 tax return (filed in 2022).
- Letter 6475. This letter will inform you of the amount the IRS sent you for the third stimulus check (or Economic Impact Payment). You’ll also need the information in this letter for your 2021 tax return.
2.) Collection Letters
Collection letters have a sequence they follow as long as the issue is outstanding. Addressing the issue early is usually better. The first ones typically state you owe money in taxes, penalties, and interest. The letters provide directions on what actions you should take if you agree and what actions you should take if you don’t agree.
3.) Audit Letters.
Audit letters come to you as certified mail, and they clearly state they are audit letters. You may receive other letters rather than audit letters that ask for additional information or clarification on your tax return.
Some general reasons for IRS letters:
- You have a balance due.
- You are due a larger or smaller refund.
- The IRS has a question about your tax return.
- The IRS wants to verify your identity.
- The IRS wants additional information.
- The IRS changed your return.
- The IRS notifies you of delays in processing your return.
IRS letters don’t need to be scary. Keep your address up to date for the IRS so you don’t miss an important letter. And when a letter does require action and has a deadline, make sure you do what is needed as soon as possible.
Jerry Zeigler is a Navy veteran who serves service members with financial counseling and education. As an Accredited Financial Counselor®, he is a member of the Better Financial Counseling Network and is the owner of JZ Financial Management. As a tax professional and Enrolled Agent, he has a passion for helping taxpayers navigate taxes.