So You Got A Letter In The Mail From The IRS Part Four

By: Mallory Megan

In parts one, two and three in this four part series of articles about mail correspondence with the Internal Revenue Service, I wrote about the three types of mail correspondence that you may get from the IRS: "correspondence audits," "CP-2000 letters" and "math error notices" and explained what each one meant and the issues associated with each. Now I'll let you know what to do to avoid ANY correspondence with the IRS at all.

First, you should be certain that every 1099 you receive is accounted for on your tax return. If it is incorrect, try to get the issuer to fix it, if you can not do this, attach an explanation to your 1040. Hold on to every receipt you get for charitable deductions and business expenses, even small ones. If you receive mail from the IRS, open it and read it, and deal with it as soon as possible, no matter how vague, off-kilter, or intimidating it may seem. Even if big money is at stake, do not expect this first letter to come by certified mail, and bad things will only happen if you ignore IRS correspondence.

So what happens if you do get mail from the IRS and you quickly open it? If it's a by-mail audit or a lot of money is at stake, seek the assistance of a skilled tax representative. If it's a CP-2000 letter or a "math error" notice and you were the one to prepare your own return, first try to pick out the discrepancy that is being questioned.

There is a possibility that you really did make an honest error and put the wrong item on the wrong line. If you paid someone to work on your return, they should look at the letter for free and fix it for no charge if it was their error. But if it is your mistake, or the IRS' you will have to pay for the help.

The IRS will not disclose what they consider the minimum discrepancy is to generate a CP-2000 letter, but experts have seen letters for as little as twenty five dollars in added tax. And of course, a lot of taxpayers will just pay up, even if they feel that they don't owe the money, just to avoid dealing with the IRS. You will be the one who has to decide. If the amount isn't too big, it might not be the worst choice, depending on what a tax professional may bill and your time constrictions.

Article Source: http://yourfinance.co.za