You’ve just picked up your mail and there among the ads, bills and junk mail is that official looking letter from the Internal Revenue Service. You get a queasy feeling in the pit of your stomach but don’t panic. DO open the letter. It might even be good news.
Usually, mail from the IRS is a notification that they need verification or substantiation of an amount you have claimed on your tax return. Read the letter thoroughly. Determine what they are looking for, and then provide the information. Some of the most commonly missed items on a return are simple things: you forgot to sign the 1040; there was an error in figuring credits or deductions; or, perhaps the income you listed doesn’t match the figures that were reported to the IRS.
If you have the correct information, it’s a simple matter to fix. Make copies of your documents verifying the information on your return and send the copies back to the IRS along with a copy of the letter. If, in fact, you didn’t include an amount on your return that should have been there, sign the form agreeing to the change and send them a check for the amount of tax due by the deadline date given for compliance. Usually, penalties and interest will be added—so, the sooner you comply, the less it will cost.
If your IRS letter advises you that your return has been selected for audit, you would be wise to seek professional advice. If you used a tax professional to prepare your return, such as an enrolled agent (EA), CPA, or attorney, you should contact that person for help with the audit. If you prepared your own return, you may wish to contact an enrolled agent immediately. Enrolled agents are authorized by the U.S. Treasury Department to represent taxpayers before all administrative levels of the IRS for audits, collections, and appeals. To find an EA in your area, visit the National Association of Enrolled Agents website at www.naea.org.
Now you’re thinking, what about that possible good news mentioned earlier? It could be that the notice is for an unexpected refund, of course. Now, open that letter!