March 11, 2022

You open your mailbox and there it is; a registered letter from the IRS. Your heart begins to race. Your palms sweat. All sorts of thoughts run through your mind; how much you owe, what you forgot, the errors you made on your tax return. Being notified by the IRS that you have an outstanding tax debt can cause many people to panic.

Typically, there are three reasons why the IRS will contact you:

  • An error or omission on your tax return means you owe additional taxes
  • An error or omission on your tax return means you are due a refund
  • There is a question or additional information is required on your tax return

If you receive a letter or notice from the IRS explaining an outstanding tax debt or for any other reason, it will contain instructions on how you should proceed. In fact, many IRS communications are easily resolved without having to call or visit an IRS office.

You owe a tax balance.

If you’ve already filed your taxes and owed a tax balance that you have yet to pay off, the IRS will send a notice regarding the debt as well as the penalties and interest that have accrued in addition to your balance. For those taxpayers who are unable to pay their tax liability in full, the IRS offers installment payments that can be made over a period of time in order to satisfy your debt. The IRS will typically present you with a payment plan based on the income that was provided on your tax return. If your income has changed or you are unable to afford the payment plan that was presented to you, it is recommended that you consult with a tax professional to see what additional options you may have. 

Information is missing on your tax return. 

Failing to provide all relevant information on your tax return could result in you receiving a certified letter from the IRS notifying you that information was missing and they need further assistance from you in order to process your return. Typically this letter is sent to taxpayers who have failed to provide all forms of income on their return and will need to submit additional proof to avoid the IRS looking further into the situation. 

Identity theft has caused your tax return to be rejected.

The IRS will notify a taxpayer if they believe that there may be fraudulent activity occurring on their tax return. The IRS will send a letter to you inquiring about a suspicious tax return that you may have not filed. The IRS will request that you do not e-file your return because of the duplicate social security number that was used. Act quickly should you receive this letter from the IRS to avoid further fraudulent activity with your personal information. 

 

Be sure to review the notice or letter to determine your responsibility. Compare it to any information, such as a tax return, that you have already submitted to ensure accuracy. If there is a discrepancy, notify the IRS immediately. Keep copies of all correspondence.

Additionally, the IRS offers assistance for your tax questions or tax debt needs. You may benefit from the Tax Toolkit, the Taxpayer Advocate Service or a Low-Income Taxpayer Clinic.