You may be going through the day’s mail and notice a letter addressed to you from the Internal Revenue Service. In the immortal words of Douglas Adams, “Don’t Panic.” This may be your anticipated federal tax refund. On opening the envelope, removing the letter or notice, you note an acronym that indicates this is a notice or a letter and a number assigned to this specific piece of correspondence.
Your reaction may vary from curiosity to fright. Regardless, you’re going to have to read the letter and likely respond in some capacity — i.e. notices from the IRS won’t go away and if it is bad news, it’s better to approach it head-on rather than let it fester, especially if it’s bad news because the cost will only get worse.
One possible outcome is it’s there to inform you that there’s a delay in processing your return. In that case, the IRS will notify you with an estimated timeline for when you can expect your refund. Of course, if you’re sitting there saying, “why would they send a letter telling me I’ll get another letter later?” It’s because radio silence leads to panic, leads to calls to the IRS, leads to tied up lines, leads to myriad crises with other people whose situation may not be as copacetic.
Of course, another reason the IRS might be reaching out is that you may have a balance due. Your response to this is likely to be different depending on your tax situation. For instance, if you filed your taxes assuming you’d be receiving a refund, then you’re in for a rude awakening and potentially a stern conversation with your existing CPA (assuming you have one).
One of the reasons the IRS may reach out is that they need more information from you. This may not be urgent or something that’s going to negatively (or positively) impact you. It could simply be that to process your taxes, they need additional documentation or another form to backup a claim.
Similarly, they may be requesting verification of your identity. In most cases, you are advised to read any IRS mail with care as it may contain pertinent information and instructions. Moreover, the IRS will only reach out via mail, not email, not phone or text. If they’re reaching out asking for you to verify your identity then a concern may be identity theft. The IRS may be monitoring your account to check for misinformation or fraudulent action. It’s also possible you may have received suspicious correspondence that is revealed to be a phishing scam. On the IRS website, you can find more information concerning scams and you can report phishing from the site. You can contact the IRS by phone, but be advised it’s likely to take myriad attempts. Most of the time, the IRS will not leave you on hold, but will have a robot respond to tell you there’s “high call volume” and “please call back later”. If this happens, you’ll need to keep trying — best to do so early in the morning and on pretty much any day but Monday (which is usually the busiest).
Of course, if you’re worried or don’t necessarily understand the IRS jargon, then you can appoint the power of attorney privilege to your accountant to ensure they can act and speak on your behalf. It’s worth noting that while the IRS has fairly good records, they can get things wrong, and in that scenario, you need someone to advocate for you.