What to Do When You Receive an IRS Notice

Receiving a notice from the IRS is never pleasant, but don’t panic just yet. The IRS  also sends notices purely informational purposes. If you told the IRS your tax identity was stolen, you will receive a notice from them, a CP01, informing you that they have received the information you provided, have verified your claim, and put an identity theft indicator on your account. There are many such harmless notices that taxpayers receive if they have communicated with the IRS. 

An IRS notice might also come unexpectedly. If you file your tax return and receive an IRS notice, it might be for many reasons. The IRS could be sending notice of an adjustment they made to your return. But in some cases, there might be an error on your return leading to an understatement of taxes due, in which case to you owe would taxes to the IRS. An IRS notice might be sent simply to tell you that the IRS is reviewing your tax return.

After receiving an IRS notice that informs you of a tax debt, you should first consider all options before contacting the IRS. Even though the IRS provides guidance, most of the time the resolution is in their favor, not yours. To make sure you resolve your tax difficulty in a way that provides you the maximum benefits, you should seek advice from experts in the field before contacting the IRS.

If a notice from the IRS is simply providing information, keep the notice in your tax records. If the notice is informing you of a tax debt, you should pay the full amount in a lump sum if affordable. If not, you may explore IRS payment plans such as an Installment Agreement, Currently Not Collectible, and Offer in Compromise to resolve the debt. 

An IRS notice regarding federal tax lien must be taken seriously and responded to immediately. If the IRS does not receive a reply and no effort is made to resolve the tax debt, the IRS will move to levy. As always, it is best to start making efforts to resolve the debt after receiving the first notices from the IRS regarding payment of the tax debt.

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