The Internal Revenue Service (IRS) has many different types of notices that they may send out to taxpayers. A notice will cover a very specific issue about the taxpayer’s account or tax return. Generally, the IRS sends notices when they believe a taxpayer owes additional tax or if there is a question about an item on a return.
It’s important to carefully read the notice to determine what the IRS is requesting. Some notices are information-only; that is, they do not require a response. Other notices require a prompt response; failure to respond timely could result in additional tax, interest, and penalties.
The IRS provides helpful guidance on common IRS notices, including notice numbers, descriptions, and sample PDFs of many notices on their webpage Understanding Your IRS Notice or Letter.
|Responding to IRS Notices
To address many notice issues, you will need to research your client’s IRS account. This may involve calling the IRS to obtain more information. You may call the number shown on your client’s notice for questions specific to that notice, or simply call the Practitioner Priority Service (PPS) line at (866) 860-4259. This line is designed to help you as a practitioner and should be used often to address IRS matters. Note that if you call the IRS, you will need the appropriate authorization form on file with the Centralized Authorization File (CAF) unit (Form 2848 or Form 8821). If your authorization isn’t recorded at the CAF unit, be prepared to fax it to the agent who takes your call. Additionally, be sure to write down the name and badge identification number of the person with whom you speak. It’s important to fully document all information that is provided to you by the IRS.
Consider requesting various transcripts to reconcile account discrepancies indicated on a notice. You may request transcripts via the IRS’ website, by calling the IRS Practitioner Priority Service (PPS) line, by utilizing the e-Services Transcript Delivery System (TDS), or by filing Form 4506-T, Request for Transcript of Tax Return. Calling the IRS or using the e-Services TDS is the quickest way to obtain transcripts.
Once you gather enough information to adequately respond to your client’s notice, usually you should write a letter to the IRS (some things can be handled via a phone conversation, but most matters are best addressed through written correspondence).
Include the following on your correspondence:
- Taxpayer name and identification number
- Notice number and date
- Tax year/period
- Tax form
Clearly explain your client’s position and provide answers to the IRS’ questions. Attach substantiation, where appropriate; be sure to write your client’s name and identification number on all attachments.
Send your response to the address or fax number indicated on the notice. If you send information to the wrong location, processing delays are inevitable.
More guidance and resources are coming!
We are in the process of developing various notice-related resources for our members. Please check back soon for additional guidance, tools, templates, and more.