Don’t Ignore Your IRS Letters!
Every year, millions of taxpayers find themselves in the unpleasant position of owing taxes. It is really important to understand that you should never ignore your IRS letter or notice. Remember, a letter is not always a bill. It can also be a request for information or notice of an action taken by the government.
Now, if it turns out to be a bill, depending on the amount, make every effort to pay it off quickly. An important fact to know is that interest and penalties will accrue if not paid by the due date.
During the Covid-19 pandemic, the IRS suspended some of the tax notices (CP letters) that they usually send out to taxpayers with unpaid balances. This does not mean that the liability ceased to exist but it was a form of consideration given to those facing financial challenges.
These notices will be resuming at some point in the near future. When a tax debt goes unpaid, it accrues additional interest and penalties, which is the last thing anyone needs. The quicker the response to the CP notice is, the better your chances are of resolving it.
Two of the main notices sent out and should be responded to are
- CP14 – A notice in writing of a balance due. This is the first notice.
2. CP504 – This is usually the final notice of a balance due. Levies may begin after that.
Now tax season for 2023 is less than a month away and some may consider skipping filing this year because of the fear that they may owe taxes. Remaining tax-compliant is very important. In order to qualify for any type of tax-relief from the IRS, taxpayers must be up-to-date on their tax filings.
If you operate a business and owe taxes, this can hinder you from raising capital or seeking certain types of funding to grow your business. Having a tax lien, negatively impacts your credit worthiness, which can create more problems in the long-run. With that said, it is wise to make some form of payment arrangement so that you can remain in good standing with the IRS.
Over the years, the IRS has enhanced their systems to create more options for taxpayers to resolve their tax issues. They have also hired more staff, not only to trigger more audits but also to provide more assistance to the public. In addition, there are tax professionals, like Enrolled Agents; Certified Public Accountants; (CPA’s) and Attorneys, who are specialized in tax resolution and can represent you in tax court, if needed.
Most important piece of advice in all of this, is to take your tax notice seriously. These letters or notices generally have a date on it for when you should respond. Usually, within 30 days.
The following are three steps you can take in the resolution process:
- Pay the tax bill immediately if possible and if you agree that the debt is owed.
- Contact the IRS to explain your hardship or ask for more time to amend your return.
- Request a collection alternative. See if you are eligible for an “offer in compromise”
To learn more or to get assistance, you can visit the IRS’s website which is frequently updated. https://www.irs.gov/help/contact-your-local-irs-office
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