A notice from the IRS is the last thing you want to find in your mailbox. You don’t have to feel intimidated, though. Read through the notice to find out how to resolve the issue and take action promptly.
Tax Audit
When a tax audit notice shows up in your mailbox, it can be merely routine. The decision to look at your tax return doesn’t always indicate you’ve done something wrong. Many audits are random.
Individuals in high-income brackets face a higher risk of being audited. Other factors such as business losses and uncommon deductions can also trigger a review. Still, it’s estimated that the IRS audits the tax returns of only 1% of the population.
Failure to Pay and Failure to File Penalties
It’s in your best interest to pay your taxes on time. If you file late and owe money, you can be subject to both Failure to File and Failure to Pay penalties. Charges include interest and penalty fees that accrue on your tax bill until you pay the full amount due. Pay your outstanding balance to stop any penalties.
Intent to Levy or Lien
The IRS can seize assets including cash and real estate. When this happens, you’ll receive an Intent to Levy notice. Read the letter thoroughly to find out how to manage the intent to levy. The message will include the amount you owe, the due date, and payment options. Pay your bill prior to the due date to avoid the tax levy.
The IRS can also file a lien on your assets. A lien stops you from selling the property or borrowing against it until you pay your taxes. If you have paid your taxes, call the number at the top of the notice to make sure the IRS has a record of your payment.
Garnishment
It’s intimidating enough to owe the IRS money. What’s even worse is having your employer find out about your debt. That can happen if the IRS garnishes your wages. To begin a garnishment, the IRS sends the company an order to deduct payments directly from your paycheck to submit to the government. To stop a garnishment, contact the IRS to set up an alternate payment method.
Statute of Limitations
Did you know there are time limits on when you can file a late tax return, and how long you have to dispute a tax bill or audit results? The time you have is called a statute of limitations. Some good news is that the IRS is also subject to a statute of limitations regarding how far back the office can go to conduct an audit. It’s generally five years.
An IRS notice can be intimidating if you’re not familiar with the terms used in the letter. However, if you take time to read the information, you can learn how to avoid actions such as levies, liens, and garnishments. There is also a number to call if you want to dispute the notice or to confirm that the IRS received your payment.