Fear of IRS Letters and Notices

There are hundreds of reasons why people receive IRS letters. Most letters sent from the IRS are computer-generated. When an individual or a business files a tax return and the liability doesn’t match the payment received, an automatic bill is generated. However, some IRS letters are positive in nature such as a CP-12 for an overpayment of $1.00 or more. Some people let the fear of the IRS cause them to overpay their taxes. Others underreport tax credits when they should have deducted legitimate expenses from income earned due to fear of causing a tax audit. IRS notice CP-32A is sent because their records indicate there is an outstanding refund check issued to the taxpayer that is outdated and no longer valid. In addition, the IRS might be seeking for more information or a missing form/schedule.

Analyze All IRS/State Letters

You should look for the reason the letter was issued and look for the instructions on how to handle the issue. All letters include a due date and should be well-planned ahead of time. Don’t procrastinate! Tax issues don’t take care of themselves! If you have decided to be represented by a professional tax consultant, contact him/her, as soon as, possible in order to review all information and decide the best solution for your case. Allow sufficient time for a tax professional to fully research tax laws. Douglas Shulman says he uses a hired tax preparer because the U.S. tax code is so complex. That’s a bad sign. He’s the I.R.S. Commissioner. The tax system has clearly gotten too complicated. The code itself holds about 3.8 million words. My advice is to never do tomorrow what you can do today

Strategies for Tax Audits

1. Rest better. You will sleep much better, not worrying about the IRS.
2. Focus on all details . You will develop good habits by being more attentive to detail
3. Eliminate fear! You will not be afraid to be more creative & aggressive in your strategies. This is in turn will save you even more taxes.
4. More control. You will have more control over your tax situation
5. Right direction. You will not be swayed in the wrong direction by inept or unconcerned advisors.
6. Showing an auditor that all income and expenses are well documented will most likely result with a positive outcome.