Mandi Ruth Sweeten
IRS Letters: To Panic or Not To Panic?
There you are, having a normal day, walking to your mailbox, only to pull out the dreaded letter. You see that eagle logo staring up at you, and an anvil drops in your stomach. You’ve received a letter from the IRS. All the things that could be wrong and fees with a growing line of zeroes start to flash through your head.
Is this letter worth the panic or not? Throughout our years of experience with the IRS, we have seen many different letters. Let’s walk through a few of the hits together. It might save you a cold sweat.
One of the most common letters is a notice of penalty for failure to pay estimated tax payments after the tax due is already paid. The IRS assigns this penalty based on payment history. If you have had taxes due with your return during the prior three years, the IRS will assess a penalty because you have not paid in your taxes throughout the year as they expect. If this is the first time you’ve received this penalty, we here at Sweeten CPA can assist you with asking for an abatement (reduction) of the penalty and talk to you about making estimated tax payments to avoid a repeat notice.
Another fairly common letter would be a notice of the balance due on your return if you have not made payment of taxes due with your return. This often happens when the tax due is higher than what the taxpayer was expecting, and they did not have the funds to pay the entire balance. If this happens to you, you can apply for an installment agreement to start paying off that balance. Our expert, Cari Vincent, is more than happy to connect with you and assist in applying for such an agreement.
As our client, we are here to support you with IRS correspondence. The first step is to securely send a copy of the letter to your CPA here at Sweeten CPA. If you are unsure who your CPA is, feel free to call in and ask. Your CPA will be able to identify the next steps and provide instructions. Please note, for our CPAs to communicate with the IRS, they will need a valid IRS Power of Attorney. We request 7-10 business days to have a response ready for the IRS.
Most importantly, don't panic. We're here for you.