You have just opened your mailbox and discovered to your horror that you have greetings from the IRS! If you’re like many people, it may be difficult to read the notice because of the hand tremors you have suddenly developed. What should you do? First of all, relax. Don’t panic and read the notice carefully.
Many IRS notices are simply requesting additional information. Even if the notice is claiming that you owe more taxes (and penalties), you must realize that the IRS tries to match your income and deductions against forms filed by your bank, employer, broker, etc.
Many IRS notices are simply requesting additional information.
Often, it can be quite difficult to match the records they receive with the descriptions you (or perhaps we) placed on your return. If the IRS cannot match the records, they will automatically assume the return is incorrect and send you a notice of assessment which will include penalties and interest.
Since the matching process performed by the IRS can be as long as 2 years after the return is filed, the penalties and interest amounts can be quite large which causes a considerable amount of taxpayer panic.
It is important that you relax and read the notice carefully to determine exactly what information the IRS is requesting. What tax year are they examining? Just as the IRS takes the position that the return is filed incorrectly until proven otherwise, you must take the opposing position that the return is accurate until you have proven otherwise to yourself. If our office prepared the return in question, please send us a copy (or fax) of the notice.
Many times, we can immediately set your mind at ease. Even in those instances where an error or omission has been made, we can at least review the amounts the IRS has assessed you and possibly even appeal the penalties. It may comfort you somewhat to know that IRS assessments are calculated incorrectly at least 20 to 25% of the time.