Individualized Systems

Why Some Taxpayers May Receive IRS Letters

If the IRS needs to contact a taxpayer, the agency will generally send a letter in the mail rather than emailing or calling. Taxpayers may receive IRS letters for many reasons, including:

- The taxpayer owes tax and did not pay it with their return or set up a payment plan.
- The IRS has a question about a tax return or needs more information to process it.
- The IRS has made an adjustment to a tax return or refund amount.
- The IRS needs to verify a taxpayer's identity.

If you receive an IRS letter in the mail, do not ignore it, but also do not panic. Some IRS notices do not require the taxpayer to take any action, while others advise the taxpayer of an issue that can be readily resolved. In many cases, you will not need to respond to the letter. For example, if an IRS notice simply informs you of a minor change made to your return or your refund amount, you can just file it with your tax records for future reference.

However, if the letter asks you to provide the IRS with additional information, you should respond as quickly as possible. Pay special attention to whether the notice includes a deadline to respond. Taxpayers who fail to reply to an IRS letter by a specified deadline may face penalties or forfeit their appeal rights.

You have the right to appeal any IRS decision about your tax return or the amount of tax you owe. If you do not understand an IRS notice or believe the IRS has made an error, a tax professional can help you figure out the situation and plan your next steps.

Missed the April 18 IRS Deadline? File Now to Reduce Penalties

The IRS due date for filing 2021 tax returns has passed, but taxpayers who missed the deadline still have many reasons to file as soon as possible. Both those who owe tax and those entitled to refunds will benefit from filing a 2021 return without further delay.

If you owe tax and did not request an automatic filing extension, filing your return now will minimize the late filing penalty. Even if you did request an extension, remember that the extension applies only to filing your return, not to paying your tax. By estimating how much tax you owe and paying now, you can reduce other IRS penalties and interest charges.

Some federal tax credits are also refundable, meaning that if you qualify, you may receive an IRS refund even if you owed no tax or had no tax withheld during the year. However, you generally must file a return to claim these credits and receive your refund. Common refundable credits include the Child Tax Credit (CTC), Earned Income Tax Credit (EITC), Recovery Rebate Credit, and Child and Dependent Care Credit.