Make sure you do these 8 things;
1. Carefully read the letters or notices the IRS sends to better understand the issue.
If you still don’t understand why you’ve received a letter or notice, you can look it up here or contact a tax professional. You can find the notice (CP) or letter (LTR) number on either the top- or the bottom-right corner of your IRS notice.
If you received a letter from the IRS, it is usually to notify you of a:
- Balance due
- Larger or smaller refund than expected
- Question about your tax return
- Delay in processing your return
- Change the IRS made to your return
The IRS may also simply need more information, or to verify your identity or return information.
2. Confirm the IRS is correct about the amount you owe.
If you believe the IRS is wrong about the amount it says you owe, you will need to evaluate the best way to challenge the amount. If it comes from a filed return, you will want to consider amending the return. If the balance is from an audit, you may want to request audit reconsideration. If the IRS has assessed penalties, you may want to evaluate penalty relief options. The goal: Pay only what you legally owe.
3. Review your options on the tax bill.
Evaluate your ability to pay the IRS. If you just need more time, an extension to pay may be appropriate. If you need a payment plan, there are several options. If you are having financial difficulties, two hardship options may be appropriate: currently not collectible status or an offer in compromise.
4. Complete the required forms and documents for your agreement.
Most IRS agreements require you to fill out forms, send the IRS documents, and/or complete an online application. This part can be tricky, depending on the type of agreement you are requesting. Many taxpayers want the help of a tax professional to complete their agreement forms.
5. Respond to the IRS in a timely manner.
It is important to meet IRS deadlines. If you miss a deadline, you can be subject to enforced collection action like liens and levies. If you need more time, contact the IRS to request a collection hold to avoid liens and levies. Keep in mind, the IRS won’t allow multiple extension requests, so it’s best to complete your agreement request on time and make sure that the IRS accepts the agreement.
6. Meet the conditions of your agreement.
If it’s a payment plan, make payments on time. You should always take a close look at any new notices you get from the IRS. The goal here is to stay in good standing with the IRS.
7. Keep copies of letters, notices and/or agreements.
You may need these later.
8. Reach out to the IRS or a tax professional
if you are unsure what to do. Tax professionals who deal with the IRS regularly can help you with all of these steps, and ultimately save you a lot of time and anxiety.