Got a Letter From the IRS? Don't Sit On It
Ignoring the IRS never makes the problem smaller. Here's what Grant tells people who are sitting on a notice.
“What should I do if I get a letter from the IRS?”
The short version
- If you get a letter, please respond to it. Do not sit on it. It's not going to go away.
- The biggest thing that gets people into real trouble is simply not filing tax returns.
- If you have a balance you can't pay, that is okay. The IRS has options: payment plans, offers in compromise, currently not collectible.
The short answer
Respond to it. Don't sit on an IRS letter and hope it goes away. It won't.
The mistake: hoping it goes away
The number one thing I see get people into real trouble with the IRS is simply not filing tax returns. That leads to serious civil penalties, with more penalties stacked on top.
Why it gets worse the longer you wait
You don't want a tax problem to turn into a criminal one. Once the IRS Criminal Investigation division is involved, that's probably beyond what I can help with. You likely need an attorney.
If a criminal case involves underreported income or overstated expenses or credits, talk to your tax professional. A lot of the cases I hear about come from tax preparers doing this to clients to get them bigger refunds. In my experience, the IRS is more likely to go after the preparer than the taxpayer, though it can still happen to the taxpayer.
What to do instead
Always file your return. If you owe more than you can pay, that's okay. Contact the IRS. You have options: payment plans, offers in compromise and currently not collectible status.
Let them know you're working on paying it off. There is always something you can do. File your taxes, and when the IRS reaches out, respond.
Frequently asked questions
What happens if I ignore an IRS letter?
It's not going to go away. Not filing tax returns can create some serious civil penalties and other penalties that can get tacked on top of it.
What if I can't pay what I owe the IRS?
That is okay. Get in contact with the IRS. They have options for you to look at: payment plans, offers in compromise, currently not collectible.
When do I need an attorney instead of a tax professional?
If you've got the Criminal Investigations Division after you, you probably need an attorney at that point.