Nothing brings more fear into the life of mere mortals than communication from the Internal Revenue Service (IRS). The IRS wields a lot of power. This institution can place a lien on your home and take money from your bank accounts. When you receive a notice from the IRS, you jump to attention and begin to remedy the situation.
In some cases, scam artists have begun taking advantage of the IRS reputation to get payments from individuals. They call on individuals and demand payments immediately over the phone or intercept tax refunds. It’s become so serious that the IRS puts out notices when new scams arise. Here’s a look at some messages from the IRS that you should never ignore and how to spot a scam.
Messages From the IRS You Read and Address Immediately
You might feel a little apprehensive when you receive a notice from the IRS. However, not all notices bring bad news. Even if the notice brings bad news, you need to open the notice and deal with whatever issue is inside. Most notices require a response within a certain amount of time, or you lose your rights to appeal the decision of the IRS. Here are the most common messages you might receive from the IRS that you need to address right away.
1. Balance Due
In some cases, you may have miscalculated your taxes owed. You may have sent in your tax return without paying the amount due. When you get a notice that you have a balance due, you should pay it right away unless you’re disputing the amount. If you can’t afford the full amount or even any portion of it, you need to contact the IRS immediately to make payment arrangements without the IRS garnishing your wages or taking other actions.
2. Owed a Larger or Smaller Refund
You carefully prepare your tax returns and look forward to receiving your refund each year. Once the IRS receives your return, they also crunch the numbers and verify the amount of your return. In some cases, you might be off, meaning you’re entitled to a smaller or larger refund. Before sending out your adjusted refund, the IRS will notify you of the discrepancy. This gives you a chance to disagree with the determination and know in advance how much money you’re going to receive.
3. Questions About Your Tax Return
While this isn’t an audit, the IRS might require answers to a variety of questions. This could be about almost anything from how long a dependent lived with you to how many months you worked at a particular job. Of course, you want to talk to your tax preparer when this happens. It’s almost always beneficial to answer their questions in writing as soon as possible.
4. Identity Verification
In some cases, there’s information missing from your IRS file or a discrepancy between the name attached to your Social Security Number and the name you used on your tax returns. It might be that you married or divorced and changed your last name in the past 12 months. In most cases, it’s a simple matter of sending in copies of your identification, marriage license, divorce decree, or other official paperwork.
5. Additional Information Needed to Process Your Return
The IRS may require certain documentation to continue processing your return or just a little more info. This might be something as simple as how long your child lived with you during the year or how many months you worked a particular job. They may need copies of receipts, payments, or bills. It’s always a good idea to provide them with this information in a timely matter, but you may want to take the time to discuss it with your tax preparer.
6. Changes Made to Your Tax Return
In some cases, when the IRS processes your tax return, they’ll make changes to it. This can be a small change or something more significant. Either way, the IRS notifies you of the changes. This gives the chance to dispute any changes made. If the changes are minor, it may not matter, but if it’s a big change, you want to know for your records and correct in your future returns.
7. Notification of a Delay in Processing of Your Tax Return
If there’s a delay in processing your tax return, the IRS will notify you of this delay. Unless they ask you for additional information or paperwork, there’s nothing for you to do. You might want to keep a copy of the return. It’s a good idea to double-check that your return does get processed by the date provided by the IRS. If it doesn’t, you may need to contact the IRS to find out what is going on with your return.
Actions to Take When Your Receive a Notice From the IRS
When you see the envelope in your mailbox from the IRS, it can be a little intimidating. However, you can’t just stuff the envelope in a drawer. You have to take certain actions to protect your rights and provide the IRS with the information they need in a timely manner. Here are a few steps to take:
1. Read the Notice
In the notice, there’s essential information about your tax return and records. Spend a few minutes reading the entire notification. No skimming! You can underline any information that’s vitally important. Once you’ve read through the notice a couple of times, you may need to pull the tax return you completed and compare it to the information provided in the letter,
2. Contact Your Tax Advisor
Whether you had a professional prepare your tax return or not, when you get a notice from the IRS requesting additional information or making changes to your tax return, then you need to go to a professional for advice and guidance. They can help you prepare a response or gather up additional information.
3. Respond to the Correspondence
You want to respond to any letters from the IRS in a timely manner. There are two reasons to do this. You don’t want to pay any additional penalty or accrued interest by waiting. Also, you want to preserve your rights to appeal any decisions they made. You only get 30 days to start the appeal process on the decision.
4. Pay the Tax Bill
If you agree with changes made and the amount owed, you need to send a payment in as quickly as possible. This saves you charges of additional penalties and interest. If you can’t pay the full amount, pay what you can and contact the IRS to make payment arrangements for the rest. When making payment arrangements, make sure it’s for an amount that you can reasonably afford.
5. Contact the IRS
You won’t always need to contact the IRS if you get a letter or notice from them. However, if you disagree with their decision, you need to contact them immediately. In the top right-hand corner of the letter, there is a contact phone number. You can also contact them through the mail; however, it usually takes around 30 days to get a response.
How to Avoid Scams
There are a lot of bad people out there who try to use your fear of the IRS to scam you out of money.
If you know a few simple things about the IRS, you can avoid and report these scams to safeguard your personal funds. Here are four things that you need to know and keep in mind.
1. Snail Mail First
The IRS will NEVER contact you through email, social media, or text message. Your first contact with the IRS will always be through snail mail. Even if you later receive a call from them to arrange a meeting, you will always have received a mail notice first. If you receive the first contact any other way, you aren’t dealing with the real deal.
2. Made Payable To
The IRS will only accept payment made out to the United States Department of Treasury. Under no circumstances does the IRS accept payments in the form of prepaid debit cards, gift cards, or wire transfers. If you’re asked to pay in one of these forms or make a check or money order out to anyone other than the Treasury Department, it’s a scam.
3. You Always Get a Chance to Dispute the Amount You Owe
The IRS must always give the taxpayer a chance to dispute the amount they owe. They will NEVER threaten you with local police, immigration, or other law enforcement agencies coming to arrest you for unpaid taxes. Other common threats that the IRS cannot carry out and would never use include revoking your driver’s license, business license, or immigration status. Anyone who does is heading a scam.
4. A Representative Always Carries Two Forms of ID
If an agent comes to your home or business to discuss or try to collect taxes, they always carry two official forms of identification. They are a pocket commission and an HSPD-12 card. They will gladly show them to you. If you still feel uncomfortable, call the IRS and verify their identity.
At Silver Tax Group, we’re ready to help you deal with any letters you get from the IRS. After reading the notice, contact us for help and advice.