Robert J. Fedor, Esq., L.L.C.

What should I do if I receive a Notice of Underreported Income from the IRS?

We've previously discussed how complex and confusing tax laws and regulations can be. As a result, many people who attempt to complete and file their own tax documents make mistakes. Tax errors related to earned income totals are common and when the IRS catches a discrepancy in reported income, and you can be assured they will, a taxpayer receives what is known as a Notice of Underreported Income.

The notice is just that, a notice which informs a taxpayer that the agency has determined there is a discrepancy between the amount of taxable income an individual listed on a tax return and the amount the IRS determined should be listed. The document will provide details related to income the IRS asserts a taxpayer failed to claim and/or any related tax credit and deduction errors. A taxpayer then has 30 days by which to respond to the notice.

An individual who receives such a notice may agree with the IRS' changes and choose to pay the amount owed, which may include additional penalties and fines, or dispute some or all of the proposed IRS changes. In cases where a taxpayer disputes the proposed IRS changes, an IRS agent will follow-up about the tax dispute. Individuals who fail to respond to a Notice of Underreported Income may be subject to additional fines and penalties.

In some cases, the IRS may choose to take legal action against taxpayers who have large amounts of unpaid taxes or tax debt. Individuals who fear they may face or who are facing criminal charges related to back taxes would be wise to contact a defense attorney who handles criminal IRS tax matters. An attorney will work to defend a taxpayer's rights and refute IRS evidence and claims of wrongdoing.

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