Making sense of what an IRS notice is saying: 3 things to know
You go to the mail box and bring in the mail. Most days, in this email-driven era, there will nothing of note there.
But what if there is a notice or letter from the IRS in your snail-mail box?
It is only natural to be a bit apprehensive when this happens. In this post, we will discuss three things that can help you make sense of an IRS notice.
An IRS notice is not necessarily bad news.
First, it’s important to realize that an IRS notice does not necessarily bear bad news.
The notice may be a request for further information; you could call that neutral news. It might even be good news, such as that you are getting a bigger refund than expected.
But if you have unpaid taxes, it is of course possible that the notice is part of the collection process.
There are many different types of IRS notices.
There are many different types of IRS notices and letters. And so the key to understanding an IRS notice is to be clear about which type of notice it is.
The first step in doing is to look in the right-hand corner, either at the top or bottom. If the document is a notice, it should say CP there. If it is a letter, it should say LTR.
On its website, the IRS provides a search tool that allows you to search by the letter or notice number for more information about it.
The notice should give you a time by which to respond.
The notice or letter should always give a date by when you have to respond.
Responding by the designated date is not only important for minimizing potential penalties and interest charges. It is also important for preserving your right to challenge the IRS.
For example, if you get a notice of deficiency, that means you have 90 days to initiate a suit in Tax Court that enables you to contest a tax amount without having to pay it first.