As part of my tax preparation practice in Lake Nona, a community within Orlando, FL "the City Beautiful", I have read my fair share of IRS notices. Whether you are here in Florida or anywhere else in the country, my advice is the same.
The IRS sends a lot of letters. I was unable to find a statistic on this, but with 15 million Americans currently in collections and another 7 million non-filers identified by the IRS, it's hard to fathom the number of notices that the IRS sends annually considering most of these taxpayers receive more than one letter from the IRS. So you have received a dreaded letter from the IRS. Now what? Don't panic and do not under any circumstances bury your head in the sand and ignore it. It will not go away on its own. There is a way forward. You most likely are not going to jail. You most likely will not have to declare bankruptcy. Here are your steps to get started on making this thing go away.
Do not ignore it. Period. No questions. You would be surprised how many people ignore the letter (or effectively ignore it). Perhaps they intend to open it, eventually. I'm not a psychologist, otherwise I could probably give some good reasons for this, but it is the worst possible thing you can do. We all hate bad news. "Adulting" may not be something you want to do today. Unfortunately, IRS problems do not go away on their own. They only get worse with time. You do NOT want to wait until you get a letter from the IRS stating their intent to levy or notifications of liens before you take action.
READ it. Again, it's amazing how many people don't do this. Perhaps it isn't as bad as you think. I know, the IRS notice is confusing and makes no sense. Read it anyway.
Do what it says Perhaps there isn't anything to do. Maybe it says they adjusted your account and you're getting an additional refund (this does happen). Perhaps you owe some additional tax that is a relatively small amount, the explanation is reasonable, and you can pay it and be done with it. It is possible you disagree with the IRS and will contest the letter, but typically you will eventually do what it says. However, in many circumstances you may want to do step #4 before step #3.
Contact a tax professional Perhaps it's best to move this step up to #3 and let a tax professional advise you on how to proceed with doing what the letter says or the possibility of contesting the letter. This will likely depend on if money is owed and how much money is owed. There are often several options available to you that could potentially abate penalties, setup a reasonable installment agreement, or even an offer in compromise to forgive part of the tax debt owed.
Should you go to a nation firm? I wouldn't. They don't have any methods available to them that aren't available to your local professional. Only an EA (enrolled agent), tax attorney, or CPA can represent you before the IRS. Find someone who works in tax resolution, that you are comfortable with, and that will evaluate your tax situation before taking thousands of dollars from you. Most likely you will have to pay a fee for the initial consultation. In my opinion, this $300-$750 fee will be well worth it. I would not personally go to anyone who wants thousands up front before they have even evaluated my situation to know if they can help nor someone who promises they can reduce my taxes or penalties before knowing my particular circumstances. These outcomes are not as easy as the infomercials make them out to be.
If you or someone you know has received an IRS notice, please contact me at (407) 243-8678 or brad@wootencpa.com or schedule an appointment.
-Brad
I enjoy helping individuals with tax preparation and tax planning as well as offering tax help to individuals dealing with tax debt, IRS liens, IRS levies, Wage Garnishments, etc. I also service businesses (including nonprofits and churches) by providing tax preparation and tax planning as well as consulting for accounting, bookkeeping, and other finance related questions. I live in Orlando, FL, but I serve clients all across the country. Schedule an appointment if you need assistance and take a look at the resource page.
6900 Tavistock Lakes Blvd Ste 400
Orlando, FL 32827
(407) 243-8678
Serving clients in Orlando, Lake Nona, Altamonte Springs, Apopka, Azalea Park, Celebration, Hunters Creek, Lake Buena Vista, Lake Hart, St Cloud, Winter Garden, Winter Park and via the latest technology remotely around the country.
*The blog posts (as well as the YouTube channel) are my personal opinions and thoughts about a wide range of topics. They are not meant to apply to individuals specifically and should never be relied on as tax or investment advice. You should contact a professional for specific advice before taking action.