Help! It’s an IRS certified mail notice
You’ve sweated, cursed, wrestled with tax return software, dug through a box of receipts … but finally, you’re done. You’ve filed your tax return on time, and all you have to do is sit back and wait for that fat refund to appear in your bank account.
Only it doesn’t arrive. Instead, what you do get is IRS certified mail: The dreaded notice that something’s gone wrong. And that peaceful, righteous feeling you had when you pressed “Submit” to file your return has turned into a cold lump in your stomach.
What happened? What should you do? Is there life after IRS certified mail?
Mistakes, audits and other fun IRS certified mail
First things first: Pour yourself a nice stiff drink.
No, not really. But it’s important that you don’t let fear or anxiety keep you from handling this issue, and promptly: The longer it takes you to respond to IRS certified mail or other notices, the more expensive and aggravating it could become.
The IRS points out that if your notice or letter requires a response by a specific date, there are two main reasons you’ll want to comply:
- to minimize additional interest and penalty charges
- to preserve your appeal rights if you don’t agree
Even without a response deadline, resist the temptation is to ignore IRS certified mail and simply hope it goes away. It won’t get better if the letter sits unopened on the kitchen table, and you’ll feel worse about it with each passing week … dreading another piece of mail.
The IRS sends certified mail and other notices for specific reasons:
- You have a balance due.
- You are due a larger or smaller refund.
- The IRS has a question about your tax return.
- The IRS needs to verify your identity.
- The IRS needs additional information.
- The IRS changed your return.
- The IRS needs to notify you of delays in processing your return.
IRS certified mail is usually reserved for more serious issues, such as notifying you of intent to put a tax lien on your property, or apply a levy and seize property.
If you make a mistake that changes the amount of taxes you owe, you may find out about it not from a notice but from your refund: It will be smaller or larger than you expected. The notice about it will arrive later, and will include complete information about the mistakes, including the information from your filed income tax return and the modified return completed by the IRS.
The letter will also include a response page for you to use to follow up with the IRS.
Of course, if that mistake means you actually owe taxes, you can be sure you’ll get a notice about that.
Whatever kind of mail you get, read it. Don’t wait, don’t put it off. Read every word carefully to make sure you understand. The IRS sends over 200 million notices every year. Yes, many of them are confusing, and often they’re an automated response to something that was flagged by a computer, which means it may not always make sense.
So if you read carefully and you still don’t understand it, you have two options for further elucidation:
- Call the number listed on the notice for explanations.
- Go to the IRS page here and search for information based on the notice (CP) or letter (LTR) number, which is fund on either the top or the bottom right-hand corner of your correspondence.
Common mistakes on tax returns already filed
Given the trepidation most taxpayers have when they sit down to file a return, it’s not surprising that simple things can cause the IRS to spit out an automatic notice to many of them.
Some of these include:
- Bad math: The leading cause of mistakes on tax returns already filed are math miscalculations and computation errors, including such things as mistakes in figuring tax-return entries as taxable income, withholding and estimated tax payments. Credits and special deductions also pose problems.
Especially tricky is figuring the earned income credit (EIC), the taxable amount of Social Security benefits or the larger standard deduction for taxpayers who are age 65 or older or blind.
- What’s in a name? Other mistakes include misspelled or different names – particularly for women who have recently gotten married or divorced, and haven’t informed the Social Security Administration of a name change.
- Not-so-hidden income: Don’t forget to include side work you may have done last year in your taxable income, along with savings and investment income. If you get a Form 1099-MISC for contractor work, or Form 1099-INT and Form 1099-DIV statements listing savings and investments, rest assured that the IRS got copies, too.
- Filing status confusion: Many people are also confused by the five filing status options. Be sure to do your homework on the one that applies to you (and will benefit you the most).
- The numbers don’t lie: Be careful when entering your Social Security number. It won’t appear on any tax package labels due to privacy concerns, and accidentally transposing numbers will get the IRS’ attention fast.
- Sign on the dotted line: Believe it or not, many taxpayers – probably exhausted by the ordeal of preparing them – forget to sign paper returns.
While the IRS will simply correct most simple mistakes for you, some mistakes on a tax return you’ve already filed will require you to file an amended return. These mistakes include filing status, the number of dependents or total taxable income.
You should also amend your return to claim tax deductions or tax credits that you did not claim when you filed your original return. The IRS instructions for filing an amended return are here and here. You can also find more reasons to file an amended return in the instructions on Form 1040X, the form you’ll use to file an amended return.
Also, if you need to revisit your numbers from any tax return you’ve already filed, you can request an IRS transcript. Transcripts are free and available for the current year and the past three years.
The dreaded audit
More serious issues than the above are always possible, especially for complex returns. IRS certified mail can be a notice that your return is an “audit candidate.” That usually means the automatic initial computer screening of your return was triggered by something such as hefty itemized deductions, investment income that doesn’t match the 1099 in your IRS file, charitable deductions missing required verification, or an incomplete tax return, which leads the IRS to question what you may have forgotten.
The highest-scoring tax returns in the audit candidate pool often proceed on to an actual audit examination.
Keep in mind that less than 1 percent of individual income tax returns are audited, according to recent U.S. Treasury Department reports. Still, if it your return does become a candidate, you’ll want to read up on the process here and follow all the instructions to the letter
Responding to IRS certified mail and other notices
Remember, your first job is to read the notice and fully understand it. If you’re facing more than one problem, handle them one at a time. Job #2 is to take the required action.
If you review the notice and your own paperwork, and agree with the IRS, and you don’t actually owe additional taxes, you don’t have to do anything but sign the response form you received and send it back to the IRS.
If you disagree with the IRS, call the telephone number on the notice immediately. If the situation is complicated, write a detailed letter and send it to the address included in the notice, along with copies of documentation that proves your calculations and the unsigned response form.
If you agree with the notice but you owe additional taxes, you have several options.
- Pay as much as you can, even if you can’t pay the full amount you owe. You can then set up an online payment agreement to pay in monthly installments.
- Check to see if you qualify for an offer in compromise, which is a way to settle your tax debt for less than the full amount.
- Request that the IRS temporarily delay collection until your financial situation improves.
- Again, it’s important that you take one of these steps within the timeframe stated in your notice.
No liquor required
As you can see, it’s not the end of life as you know it when you get IRS certified mail, and responding calmly and methodically will not only get the IRS off your back sooner, but will also give you greater peace of mind.
One good tip for dealing with IRS certified mail: Two months after you resolve your issue, check back with the IRS to make sure that the agency’s view of the outcome is consistent with your expectations. This helps avoid surprises and keeps IRS notices at bay in future tax years.
Another important tip: You may qualify to use the Taxpayer Advocate Service. The TAS can help if:
- Your problem is causing financial difficulties for you, your family or your business.
- You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised.
- You face (or your business is facing) an immediate threat of adverse action.
And there is one more important thing to note about IRS communications: The IRS will always send you letters via the U.S. Postal Service. TYou will never receive an email or contact on social media.
Also, never give out any information to anyone who calls you on the phone demanding immediate payment or threatening dire consequences. These are scammers who will go so far as to offer fake IRS identification numbers.
So don’t fear the mailman. Take courage in the knowledge that the IRS has plenty of information available to you, and that it has cut-and-dried processes to manage even the most complex issues that trigger IRS certified mail. You can do this, and you don’t even have to head to the nearest bar for comfort.