Every year, the IRS sends millions of letters and notices to taxpayers for various reasons. There are many different types of notices issued by the IRS — depending on the notice you receive, you may have a range of options for responding.
If you have not filed an income tax return for at least one year, the IRS may issue a letter inquiring about this omission. Such a notice typically cites the tax year in question and provides a short list of answers to select from (such as, “I am not required to file for this year because I did not earn enough income.”) If your answer is this simple, it is entirely possible that this response will end the inquiry.
If you haven’t filed a tax return for a number of years, the IRS may prepare a “Substitute For Return” (SFR) using third-party information — such as your Form W-2 (wages) and Form 1099 (interest, dividends, rents, royalties, and similar compensation).
Another type of notice that is commonly issued by the IRS is a demand for payment. This can arise after a tax return was filed without full payment of the balance due, or if there’s an outstanding balance from a prior year’s return. It will also come up if the IRS matches a return with its supporting documents and determines that certain items have been reported incorrectly.
If you receive an IRS notice in the mail, you should first determine the nature of the inquiry and the stated deadline for a response. It is often possible to get additional time to respond to a notice, and you might even be able to resolve the issue by simply calling the telephone number provided on the notice.
Disregarding an IRS letter or notice is never a good idea. If you are unable to resolve an issue with your IRS notice, it may be advisable to contact the Taxpayer Advocate Service (TAS). The TAS is “your voice at the IRS” — they focus on helping taxpayers who are stuck in the system, particularly those who have been unable to resolve their tax disputes using normal channels.
At any stage, it may be in your best interest to hire Clergy Financial Resources to help represent your interests. We have 37 years of clergy tax law experience to advocate your position.
Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.
This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.
For more information or if you need additional assistance, please use the contact information below.
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