Tax 101

What to do when you get a letter from the IRS

Last updated:

December 1, 2022

Share

Received a letter from the IRS or from your state? If you received a notice letter from the IRS or your state, don’t panic and don’t ignore it.  Just because you received a letter doesn’t mean that the IRS is coming after you.  In many cases, the notice that you received will be easy to resolve.  Here are some steps you can take when you get a letter from the IRS.

  1. Don’t ignore the notice and don’t panic

When you first get a letter from the IRS you may feel a moment of dread but do not ignore the letter.  Take the time to read the letter so that you understand what the IRS is telling you.  The IRS may send notice letters for reasons such as: 

  • If your information has been accessed by the Department of Education
  • If you have a balance due;
  • If the IRS is changing your refund amount;
  • If the IRS has a question about your return;
  • If you need to verify your identity;
  • If the IRS needs additional information

If English is not your first language or some of the terminology is unclear, you can also ask the IRS to provide you with a translated letter.  In addition, if you are speaking with an IRS agent, you can request an interpreter to help you understand what you need to do to resolve the letter.

  1. Review what the notice is saying

Depending on the type of letter that you received, you may not have to do anything or you may need to respond to the IRS.  Many letters from the IRS are just informational and do not require you to provide a response.  Informational letters may let you know that your tax information was accessed by another government agency for reasons such as filling out your (or your kid’s) FAFSA form (Free Application for Federal Student Aid). 

Some letters may be telling you that the amount of your refund or taxes due may have been changed due to information that the IRS has in their database.  This may be due to a tax form that was not included on your tax return such as a W-2.  In a situation where the IRS changes your refund or tax due, you will have an opportunity to respond if you disagree with the changes.

Other letters will request additional information to complete the processing of your return.  This may happen if the IRS needs to verify who should be claiming your dependent.  In situations like this you may need to provide information about where your dependent was living during the tax year or expenses paid on their behalf.

Lastly, if the letter looks suspicious make sure you reach out to the IRS at their phone line for individual assistance - 800-829-1040.  With the help of an IRS assistor, you can determine if the letter is fraudulent.  If you are unsure, it is important to take the time to verify the letter before you send any sensitive information or money.

  1. Ask for assistance if you are unsure of the next steps

If the letter is still confusing, take a look at the letter code.  This will be in the top or bottom right of the letter.  These codes can be looked up online or you can talk to your tax preparer if you need additional help figuring out what the IRS is asking you to do.

If you are unsure of how to proceed, you can reach out to the IRS directly.  The phone number for individual tax returns is 800-829-1040.  It is good to start with the IRS because they will have access to the letter that was sent to you as well as any notes from your file.  They may be able to help clear up any confusion on your next steps.

If you are unable to reach the IRS or are still unsure of what to do next, reach out to your tax preparer if you worked with someone.  Oftentimes they will have some familiarity with the letter and they will already have some of your tax information on hand.  If they made a mistake they may be able to clear up any confusion directly with the IRS.

Lastly you can work with a group that is there to help folks through their taxes.  Some are free like the Volunteer Income Tax Assistance (VITA) program or the Low-Income Taxpayer Clinics (LITCs).  Both programs have eligibility rules so make sure you qualify for assistance.  Some organizations (like Let’s Get Set) have support for individuals who are working on their taxes after the deadline where you may be able to ask questions.  (Sign-up for access to our support text line here)

  1. Respond to the notice if instructed

If you need to respond to the notice, start by finding the information about who you are communicating with on the letter.  Depending on the issue and where you live in the US you may be sending your letter to a different address than what you might expect.  The IRS has offices across the country and you will want to make sure your letter goes to the right place.

Remember - it is fine to keep the letter simple, just make sure that you are responding to the request.  (i.e., “I am responding to Notice CP302 in order to disagree with the changes to my refund for the following reasons.  First, …)  It is more important to be clear about your response so that the IRS understands your argument than it is to use any particular phrases or format.

If you have evidence that you refer to in your letter, make sure you send along a copy of those documents with your letter.  

An example of this is if the IRS believes that you received more money at one of your jobs than you actually received.  To dispute the changes, you would send in a copy of your W-2 showing how much you actually received.  (“Here is my W-2 from my employer that shows that I made $XXX instead of $XXX that the IRS has in their records”)

Do not send any original documents unless instructed explicitly in the letter.

  1. Keep a copy of any notice you receive and anything you send in response 

Keeping a copy of any correspondence between you and the IRS is typically a good policy.  This means that any letters from the IRS, letters you send, and any other documentation that you send in.  If the IRS ever states that they never received your letter, you can provide them with another copy of what you had sent in.

  1. Know that the IRS will contact you through snail mail to start.

Finally, there are a lot of scammers out there that are going to try to take advantage of tax time.  The IRS will contact you through postal mail to start.  The IRS will not contact you initially by email, text, or phone and ask for sensitive information.  If someone reaches out over the phone and says they are from the IRS If payment is required they will also send you to https://www.irs.gov/payments, which is a governmental website.  

If you believe that you have been a victim or targeted by a tax scam, you can report the scam at the IRS website:  https://www.irs.gov/individuals/how-do-you-report-suspected-tax-fraud-activity

view raw