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What to Avoid When You Get an IRS Letter

You know that feeling of dread when you spot an official envelope marked with the IRS or state tax agency's insignia? The mere sight of it can send stress levels soaring.

The entrenched language.
The formal format.
The unsettling feeling that a problem has arisen.

Before you act hastily, remember to take a calming breath.

In our experience, the anxiety tied to IRS and state tax letters often isn't about the letters themselves. Instead, it stems from immediate—and often unnecessary—reactions.

Here's a thoughtful look at what to avoid when you receive a tax notice—and why taking your time is crucial.

Don’t Jump to Conclusions

Every year, tax agencies distribute millions of notices.

Many are simply about:

  • Seeking additional information
  • Correcting automated discrepancies
  • Following up on missing data
  • Providing balance reminders unreflective of recent payments

Receiving a notice doesn’t automatically imply wrongdoing; it often requests a verification or correction.

Jumping to conclusions only exacerbates stress without providing solutions.

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Don’t Disregard the Notice

Hoping the issue resolves itself by dodging the notice often leads to bigger problems.

Neglecting a notice can lead to:

  • Missed deadlines for responding
  • Additional fines and accrued interest
  • Fewer avenues for resolution

This is pertinent for both IRS and state agencies. Remember, some states can be quicker and more aggressive in their enforcement than the IRS.

Don’t Reach Out Without a Plan

This may catch you off guard.

Engaging with the IRS or state agency without comprehending the notice entirely can:

  • Fix inaccurate assumptions
  • Result in inconsistent or incomplete communications
  • Complicate issues that may be layered than they appear

Tax authorities operate based on procedure, not context. Calls made without preparation risk complicating, not clarifying, matters.

Don’t Pay Without Verifying

This is a prevalent—and costly—misstep.

Settling a payment without confirming the notice can entail:

  • Excess payment
  • Omitting applicable credits or adjustments
  • Foregoing opportunities to correct any mistakes

Post-payment, remedying errors becomes increasingly difficult.

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Don’t Hastily File an Amended Return

While amended returns have their place, recklessly doing so can backfire.

  • They require processing time
  • They can invite additional scrutiny
  • They might instigate new problems if misfiled

Be deliberate, not impulsive, with amendments.

Don’t Assume It’s a DIY Task

While some notices are straightforward, others aren't.

What appears a minor issue may hint at:

  • Withholding conundrums
  • Reporting mismatches
  • Estimated tax discrepancies
  • Errors from past years continuing forward

Handling these alone might invite stress—especially when timelines and enforcements are involved.

Steps to Take Instead

An appropriate response typically involves three key steps:

  1. Thoroughly read and understand the notice
  2. Grasp exactly what the agency requires
  3. Respond with accuracy and timeliness

Guidance can greatly aid this process, especially with heightened emotions.

The Core Message

Receiving a tax notice from the IRS or state agency can be daunting—but doesn't need to be overwhelming.

Most issues don't originate from the letter itself. They stem from panic, hasty assumptions, and rushed responses.

If you're dealing with a tax notice, get in touch with us before responding. For current clients, early communication allows us to evaluate the notice, confirm what’s sought, and manage the issue with minimal stress.

Important Reminder

This article aims to provide general educational guidance. It is not a substitute for legal advice. Tax notices vary, and each situation is unique. For legal advice, seek a qualified attorney. For assistance with IRS or state tax notices, consult your tax professional.

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