Responding to a Tax Notice
Receiving a tax notice from the IRS or another tax authority can be a harrowing experience. Tax notices often ask that money be paid due to alleged miscalculations in determining taxes or can ask for clarifications about statements made on a taxpayer’s return. No matter the reason for the tax notice, there are certain things that taxpayers should keep in mind when responding to a tax notice from the IRS.
Fill in the Response Form
When responding to a tax notice from the IRS, it is important to completely fill out the response form included with the notice if one is so included. The tax notice will generally have several options from which the taxpayer can choose. The taxpayer can agree with the determinations of the IRS and submit payment for any alleged underpayment or other inconsistency on a tax return. On the other hand, the taxpayer can select that he or she does not agree with the determinations of the IRS. Moreover, the tax form also allows the taxpayer to authorize another person to receive information about the tax issue, and this individual is usually a spouse of the taxpayer, an attorney, or another similar professional. All statements should be made legibly so that the IRS does not have any issues interpretating the statements made by the taxpayer.
Additional Documentation
It is important to include supporting documentation when responding to a tax notice. This almost always includes a signed statement by the taxpayer clarifying the issues involved in the notice received by the taxpayer. The written statement usually takes the form of a letter written to the IRS and discusses the particular situation that is subject to the notice received by the taxpayer. The taxpayer also discusses their side of the story and why they disagree with the assessment made by the IRS. If the notice received from the IRS relates to a business, it is oftentimes advisable to draft the letter on letterhead of the business to show that there is a connection between the person writing the letter and the business.
Depending on the situation, a taxpayer may need to provide additional documentation when responding to a tax notice from the IRS. For instance, the taxpayer may need to produce original or corrected 1099 forms if the notice involved wrongful attribution of income. Moreover, the response letter may be accompanied by bank account statements if the taxpayer needs to show where income has been deposited and the amount and form of any income. In addition, the response may need to be accompanied by signed statements of other parties who might be involved in the tax situation that is subject to a particular tax notice. Oftentimes, the IRS will ask the taxpayer for additional documentation if they need more information, but the initial response should give the IRS a fair understanding of the taxpayer’s situation and the taxpayer’s arguments.
Followup Requests
After the IRS receives the initial responses from a taxpayer, the next step of responding to a tax notice involves providing information pursuant to further requests from the IRS. Normally, the IRS will not be satisfied by the initial documents provided by a taxpayer. They may require that the taxpayer fill out a questionnaire so that the IRS can discover more information about the issue. In addition, the IRS may request additional documents that were not provided in the initial response. Depending on the circumstances, this can include accounting reports, receipts, bank account statements, and other materials. In some situations, the IRS may request an interview with the taxpayer and others in order to ascertain more information about the situation. The IRS may make subsequent requests for information or materials to clarify issues until the IRS reaches a final resolution about the matter.
Hire an Attorney
One of the most import things to do when responding to a tax notice involving a complex situation is to hire an attorney. A lawyer generally knows how to frame arguments in the best way possible in order to be persuasive to the IRS. Moreover, a tax lawyer may have experience with your situation and knows the type of documents that can be helpful to resolve a tax notice. Furthermore, lawyers may be able to evaluate the legal consequences of making certain statements and producing documents in ways that most nonlawyers would not be able to evaluate.
In order to hire an attorney when responding to a tax notice, it is important that the proper forms be filled out for the IRS. Generally, the response form sent to the IRS includes a place authorizing a third party to receive information about the tax matter, and the lawyer’s information should be included in this space. Moreover, taxpayers may need to fill out a power of attorney form and send this with the response to the IRS to provide greater authorization to an attorney when responding to a tax notice. If these steps are not followed, it might be more difficult for an attorney to be included in the process of resolving a tax issue.
The Rothman Law Firm has experience responding to tax notices on behalf of both individuals and businesses. If you are looking for an experienced New York and New Jersey lawyer to help you respond to a tax notice, please feel free to contact The Rothman Law Firm to request a free legal consultation.