If you receive a collection letter from the Internal Revenue Service (IRS), there are some critical steps to take so that you can effectively respond on your own behalf.
The IRS sends letters to taxpayers for a variety of reasons, including notice of a tax audit, problems with your tax return, or a request for information. There are also collection letters if you are behind on taxes. As much as you might want to set that letter aside, the price of that letter is only going to increase the longer you ignore it.
How to respond when you receive a collection notice
Consider these tips if you receive a collection notice from the IRS:
- If you receive a phone call, email, text, or notice on social media that you owe the IRS, do not respond or provide additional information. Impersonating the IRS is common. The IRS generally reaches out to taxpayers by letter—if the “IRS” is contacting you another way, provide no information and check your IRS account or call the IRS directly for more information.
- Check to see if the letter is accurate. If you have an online account with the IRS, review it and request a transcript if needed to better understand the issue. If needed, call the IRS for an explanation—or speak with an experienced tax attorney to understand the claim. After review, if you owe the money, consider whether you want to dispute the amount or pay it. Penalties and interest are added as long as the debt remains unpaid.
- If you know you owe the money claimed, consider an IRS payment plan, or better yet, pay it off with a credit card or loan from an entity with lower interest rates than the IRS. Avoid IRS tax collection enforcement if at all possible.
- If you believe the collection notice was sent in error, the letter should provide contact information for a response. Send the data and documentation needed to explain why you believe there was an error. If an error was made, and you do not respond, the matter will roll forward to collections.
- If you were audited but did not receive the audit notice or the audit report—you can contest the assessment by asking for an audit reconsideration. If you can provide new information that addresses the issue raised by the IRS, or you disagree with the amount the IRS says that you owe (and you can show why), you can also request reconsideration.
If you receive a collection or other notice from the IRS, the best time to deal with it is now. If you need guidance on a significant tax liability, speak with your tax attorney for help.
Strategic guidance on compliance and collection issues with the IRS
When you are involved in a tax controversy with the IRS, our legal team offers strategic guidance for recognizing and resolving challenges with the IRS. Contact us to set up a consultation or call us at 440-250-9709. We serve clients across the U.S. and internationally from our offices in Cleveland and Chicago.
For additional support, we invite you to explore our comprehensive guide, Since You Asked: 15 Common and Concerning Tax Law Questions and Answers.