The IRS is getting tougher with tax enforcement as time goes by. The IRS has many tools to examine and scrutinize taxpayers that they suspect aren’t being totally honest and clean about their finances. One such way to achieve that is their so-called “soft letters.”
The IRS sends soft letters or notices to taxpayers to encourage them to come forward with their full disclosure of their finances. We will guide you through what these letters are and what to do if you receive one of those.
Your IRS notice mostly explains the reason why you are receiving it. It also guides you, how to handle it. If a soft letter doesn’t inquire anything and it simply shows facts and figures about your own tax returns and tax figure, you don’t need to respond to such a letter if you agree with the information it contains.
Reasons To Receive IRS Soft Letter in Newark
Taxpayers are usually likely to receive IRS soft letter for one or more of the following reasons;
- There is a tax payment balance due.
- The taxpayer is due a smaller or larger refund.
- The IRS has something to inquire about tax returns.
- The IRS needs to verify the identity of taxpayers.
- Some additional information is needed about taxpayers.
- The IRS has made changes to your returns by rectifying any mistakes made by taxpayers.
- To notify taxpayers about the delay in processing tax returns.
What to do?
The first thing to do after receiving an IRS soft letter is not to worry. Read the notice carefully and comprehensively. Each letter or notice contains valuable information that may help you in the future, especially if the IRS has made any changes in your returns. The next most obvious and sane thing to do is to respond to letters. If notice requires you to respond with some information or require some other response from you by a specified date, you need to comply for the following reasons;
- To minimize additional penalty and interest charges.
- To preserve the right of appeal if you don’t agree with how the IRS handles your returns.
Another necessary response to IRS notice is to pay as much as you can that you think you really owe to the IRS but don’t want to at the moment. The more you pay early, increase the chances of any relief from the IRS.
Do’s and Don’ts:
The more important question than what to do after receiving IRS soft notice is what not to do.
- Don’t ignore any communication initiated by the IRS, as it will make you look non-compliant.
- Do not panic as it will not solve any problems for you; rather make you less able to solve them.
- Don’t reply to a Soft letter unless the letter clearly asks you to.
Things To Do After Receiving IRS Letters
- Review the letter in every aspect and take timely action.
- Do respond to information you think isn’t right. Disputed information needs to be rectified as soon as possible.
- Do avoid scams. There are many scammers out there to lure you into their trap by posing as IRS representatives or officials to gain taxpayers’ personal financial information. Remember that the IRS doesn’t ask you about bank pins or other information of any sort.
Keep in mind that there is usually no need to respond to IRS letters. But if they ask you to, do it as early as possible.
Zee Maq is a content writer who specializes in writing business and finance content. She has nine years of experience and loves to provide problem-solving content to help people tackle challenges in their everyday lives.