The Dreaded IRS Notice

Published on Thursday, July 19, 2012

In an attempt to close the $450 billion tax gap, which is the difference between what is collected and what would be collected if the tax system had 100% compliance, the IRS has initiated a number of different procedures.  Among these procedures is a drastic increase in the volume of IRS notices that it sends to taxpayers.

In 2009, the IRS issued more than 201 million taxpayer notices, up from 30 million in 2001.  Although our office has seen a corresponding increase in the notices our clients have received, we are happy to say that the vast majority of these are handled with relative ease and result in no change to the returns as filed.

If you receive an IRS notice, please forward it to us immediately.  Our staff has the experience and expertise necessary to make the IRS correspondence process move as smoothly as possible.  We will typically have you sign a Power of Attorney Form allowing us to correspond with the IRS directly on your behalf, which minimizes your stress and involvement.  

When dealing with taxpayers who do not have backgrounds in taxation the IRS may try to treat a grey area as black or white.  In fact, we know of instances where an agent incorrectly disallowed deductions that would have resulted in increased tax liability if the client had not contacted us.

In conclusion, don’t panic if you receive correspondence from the IRS.  Most correspondence pertains to an issue that can be cleared up with one letter to the Service. Although this will often result in no additional tax liability, it is important get us involved as soon as possible.

Tyler M. Nyman, CPA