How to Respond to an IRS Notice

You’re flipping through the mail when you see it. An envelope with an IRS return address. OMG! What’s this about? Sure, you’re nervous but don’t stick it in a drawer. No matter what, it’s information that needs your attention. Whether you rip it open immediately or wait until you’ve sat down, you eventually see it – a Notice from the IRS with potential unwelcome news.

Now what? Your IRS Notice may be long and difficult to decipher, but it explains the reason they are contacting you and instructions on how to handle the issue. Maybe information reported by a third party does not match your return or you made a math error. The IRS might just be asking for clarifying information. 

Regardless, let’s simplify how to respond with a little Q&A:

  • Why did the IRS send me a Notice?

The IRS sends Notices to taxpayers who have a balance due, are due a different refund than originally reported, their return has been changed, or additional information is needed. Notices may also communicate the need to verify taxpayer identity or a delay in processing the return. Details are in the Notice. Read it carefully.

  • How should I respond?

Typically, you only need to respond if you don’t agree with the information in the Notice, if the IRS requested additional information, or if you have a balance due. If the income or payment information reported to the IRS doesn’t match your tax return, check to see if you made a mistake. It happens. Just pay the amount due, or at least as much as you can.

  • What if I don’t agree?

Sometimes the IRS makes a mistake or does not understand the information on your tax return. If that’s the case, make copies of any schedules or other clarifying documentation. Complete the Notice Response Form and include any necessary explanations. Don’t assume that the IRS can understand your documents without an explanation.

  • When should I respond?

IRS Notices require you to respond by a specific date. There are two main reasons you’ll want to meet that deadline – to minimize the accrual of any additional interest and penalty charges, and to preserve your appeal rights if you don’t agree. Keep copies of all Notices and your response (with support documents) for future reference.

Getting an IRS Notice is nerve-wracking but ignoring it will only make it worse. Read the Notice carefully and respond with an explanation by the due date if you don’t agree. Made a mistake? Pay the amount due, or as much as you can, to reduce additional interest and penalties. When you know what to do, getting a Notice from the IRS won’t make your heart skip a beat.

Want more details? Check out the IRS website.