Tuesday, February 10, 2009

Writing the IRS

About 3% of taxpayers get a notice from the IRS each year. Luckily, it’s not the same 3% every year. What should you do when you receive a letter? First of all, don’t ignore it. That would be a big mistake. The IRS will not forget and will harass you forever.
Most of the time the IRS is asking you about a mistake they think you made on your tax return. Take a deep breath and read the letter. Then read it again because you freaked out just opening the envelope. Compare what they say to what is on your tax return (you did keep a copy of your tax return didn’t you).

If they are right, sign the notice and send them a check. If they are wrong, and they are 20% of the time, you need to explain why they are wrong.

If they are wrong and you write them back, here is what you DON’T say:

* Don’t tell then how stupid they are.
* Don’t explain all the circumstances around the transaction or error. (They really don’t care that Aunt Sarah is somehow involved.)
* Don’t apologize.
* Don’t address the envelope to the Infernal Revenue Service.

And here are some DO’s.

* Do type the letter. You want them to be able to read your response.
* Do keep the letter short, one page should be enough.
* Do stick to the facts.
* Do be polite.
* Do sign the letter.
* Do respond quickly
* Do thank them for their help, no matter how much it galls you.

1 comment:

Anonymous said...

Great post, Thom. I am not going to identify myself here, but you helped me when the IRS notified me that I owed over a million dollars because when they calculated my profits they forgot to notice that I bought something before I sold it and didn't include the purchase price. Your calmness and confidence, and the professional, factual letter you wrote, got me through till the IRS realized the mistake, and yes I did freak out when I got the letter!