If you are one of the unlucky people to get your mail and see an envelope from the IRS or your State Department of Revenue, you understand the title of this article. After the initial shock wears off, there are several thoughts that might run through your mind, including ignore it. This is the absolute worst possible option. The IRS is not known for their willingness to just “let it go” so the best thing you can do is open the envelope and see what it is about.
Occasionally, the letter is just to tell you that they have updated your address, even though you have not moved. Or, the letter inside might be that you made a math error and they owe you some money. Unfortunately, the most common letter is that an error occurred, and they want more money from you. Do NOT panic!
The first letter you get is usually just a notification of error and will give you a chance to fix it or explain your position. Of course, there is usually an option to agree and just pay it. This is what they want you to do but I would highly recommend you consult with a tax professional before just agreeing with the IRS. In my 20+ years of tax practice, I would estimate that 90% or greater of the notices are incorrect. The IRS usually only has half the information and makes their adjustment based on that information. Often, when the rest of the story is added, the result is substantially different. This could mean owing a lot less or even getting a refund.
Now, you need to find a trusted tax professional and have a sit down with them. Many tax professionals will offer you a free consultation or at least charge you a reasonable rate for some friendly advice. It is worth the money and time to get their perspective and understand your options.
Regardless of the ultimate outcome, the sooner it gets dealt with, the better it will be. This is one problem that will NOT just go away and only gets worse with time.
If you have recently gotten a letter from the IRS or State, give us a call at 719-728-2829. We would be happy to sit down with you and help you handle it.