Try To Keep Calm, You Got a Letter from the IRS

I can't speak for everyone, but If I received a letter from any federal enforcement agency my heart would plunge, my stomach turn, and I may even say a little prayer. Now  If the IRS sent a thick letter addressed to me, oh my, I think my heart would stop all together.

The IRS jailed/fined high profiled individuals such as Wesley Snipes, Lauren Hill, Martha Stewart, and Nicholas Cage for tax evasion.  Why should I be CALM. These SUCKERS DON'T PLAY. NO way would I be CALM!  I don't think calm is a normal reaction even for the most modest taxpayer.

So what should you do if the IRS sends you a correspondents? Well, I'll give you my two cents on this topic. 

Disclaimer:  Every tax situation is unique, Use this list as a general guide.  You should seek additional guidance from a qualified, competent, professional who is familiar with your case for specific advice.

Here's my top 5 Do's if the IRS writes you.

1. Calm down (after panicking) and read the letter. See why they are writing you. It may be to inform you that you've been under paid and extra money is coming your way (positive thinking). It does happen, but rarely. Check to make sure the letter is from the IRS and not a any other agencies or hackers fishing for your information.

2.  Re-read the letter. Try to discern what the IRS is instructing you to do. It may not be clear the first time you read the letter cause your heart is still racing. Often time, the IRS will make a recommendation and ask you if you agree or not. Or they may request additional information to support something to claim on your tax return.  You will be given a specific time frame to respond typically 30 days. IGNORING THE LETTER WILL NOT MAKE IT GO AWAY.

3. Get help. Contact the person who completed your return to inform them of the letter. They may be able to help gather supporting information. If you completed your return yourself, you should  still reach out for help. A second opinion may be helpful if your situation is complicated.

4. Visit the IRS.GOV website to review the Publication on the topic you are being requested to answer. For example, if the IRS inform you that you incorrectly claimed an education credit. There is a an entire Publication dedicated to this topic. You may find that you are justified to use the credit. Cite your findings in your response letter. Also, the IRS website is a great place to get additional information on tax payers rights and access to a tax payer advocate. All free.

5. Respond! If the letter suggest that you should respond by a certain time frame, you ABSOLUTELY should RESPOND. If you are unclear what you to write in your response, call them and ask.  Even if the IRS is correct in their adjustment of your taxes, you should respond and let them know that you are in agreement with the changes.  Add in your letter what you intend to do to correct the return in question.  If you don't feel comfortable calling, give your tax preparer

 permission to call on your behalf.  Last resort, ask for more time to response.

Bonus: DO NOT IGNORE THE LETTER.  It will only cause you undue grief in the long run. Not all of us are like Martha Stewart and can survive jail.