How to Handle IRS Tax Return and Account Problems
Tax return and account problems, at a glance:
- The IRS sends over 200 million notices each year. Many are caused by tax return and account problems.
- Many of these discrepancies result in missing refunds or notices about tax bills.
- It’s important to quickly work with the IRS to clear up any issues.
- You may need to get the Taxpayer Advocate involved to work through complicated issues.
You can get expert help with your tax return or account problem.
What you need to know about tax return and account problems
Sometimes, the information you use to file a tax return or pay your taxes doesn’t agree with information the IRS has. The IRS may ask for more information to process your return, or the IRS may propose changes to your return. To clear up the confusion, you’ll need to find out what’s causing the discrepancy with the IRS.
Most of the time, you’ll just have one issue – like missing information or forms on your return. Things may get more complicated if you’ve had a past audit, owe taxes, or have been the victim of tax identity theft. And the latest notice you got from the IRS may not give you a full picture of what’s going on.
You or your tax professional will need to look into the situation more to get a clear picture and identify all your options to solve the return/account problem.
Here’s where to start.
How to address your tax return or account problem
1. Fully understand your situation.
- Review your IRS return and account information, including notices, tax returns, and other documents that are relevant to the issue.
- Understand exactly what the IRS is saying about the issue. This may require calling the IRS. Start with the phone number listed on your last notice. Understanding the IRS perspective on your issue is easier if you know “IRS speak” – that is, how the IRS explains the details of your tax account. A tax professional can help you navigate this step.
- You may need to request your IRS transcripts to match up against your transactions. Learn how to research your IRS account.
- Remember that IRS transcripts don’t show all the activity on your account. Also, interpreting transcripts can be difficult, so you may want to consult a tax expert.
2. Define what issues need to be addressed, if any.
- After you have all the facts, identify the tax issue you need to address.
- If there are immediate deadlines, call the IRS to ask for more time to respond.
3. Understand your options and create a plan to resolve the issue.
- Research how to address your issue. It may be as simple as providing proof of an item on your return or filing an additional form. If it’s more complicated, you may have several options, so it’s important to select the best one for your situation.
- Understand how each option works. For example, if the problem relates to an IRS penalty, you could request first-time penalty abatement to get it removed. But you’d need to understand several things about first-time abatement, such as:
- It’s only an option for certain penalties and circumstances.
- You can use it only once every four years, so it’s especially important to file and pay on time in the future.
- If you have multiple issues, you may need to solve them in a particular order and with different IRS units.
4. Correct your discrepancy and any other underlying issues.
- Contact and/or respond to the IRS by any deadlines in the notice. If you miss deadlines, you could lose appeal rights. For example, if you don’t respond to a request for more information by the deadline, the IRS could automatically adjust your return, and possibly send you a bill for additional taxes owed. Then, you’ll have an IRS collection problem, too.
- Address any underlying issues. If you have multiple issues or multiple tax years involved, resolve each issue completely and confirm that the IRS has addressed all tax years.
- The IRS may change your deadlines, so be prepared. If you need more time, ask the IRS before the deadline expires.
- Two months after you resolve your issue, check back with the IRS to make sure that the IRS view on the outcome is consistent with your expectations.
- Stay in compliance to avoid future issues. File and pay on time. If you get another notice, address it immediately.
How to get expert help
Your H&R Block tax professional can help you investigate the cause of your notice and communicate with the IRS.
Bring these five items to your appointment
- A copy of any notices related to your tax situation
- A copy of your tax return for the year(s) in question
- Any account transcripts you’ve requested. If you don’t have your transcripts, your tax professional can get them for you.
- A copy of the correct return filed or to be filed. If you haven’t filed, bring the information needed to complete your tax return.
- A copy of any responses you’ve sent to the IRS
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