You may not be at fault, but the problem just won’t go away.
This year, it seems as if more people than ever are receiving tax notices from the US Internal Revenue Service and the Georgia Department of Revenue. The total volume may not be a record, but the notices (especially from the GA DOR) are coming all at once and highlighting potential issues from up to several years back.
Most notices are documentation that, in the government’s opinion, a mistake has been made on your tax return. While some notices are just confirmations or corrections, with little or no impact to your taxes, others require action on your part. Regardless, they can be pretty intimidating, with legal language, detailed calculations, and sometimes even fines and other penalties. The primary reasons include:
- Incomplete tax returns
- Incorrect information reported
- Correct payment not received
It may not be your fault
We all make mistakes, even CPAs! We’re seeing more situations these days where the government has made the mistake, not the taxpayer. One client’s tax payment was credited incorrectly to the following year’s tax return. Another client made a payment, but the government never documented receipt.
Regardless of the validity and cause of the error:
- Don’t panic – no one goes to tax jail based on a first notice.
- Read the notice carefully – notices may require additional information or payment.
- Don’t ignore it – if a response is required, the issue won’t go away. You must respond.
- Contact a CPA like Bach, James, Mansour & Company – we’ll help you respond and resolve.
The government has a long memory
When a response is required, the first notice normally provides a window of about a month. This is your best opportunity to figure out what actually occurred, work with the appropriate agency to resolve, and if applicable, reduce or remove fines and other penalties. It’s also when you should call us for assistance. Depending on the specific notice, we’ll help you respond, or we can respond on your behalf.
By the time you receive a second notice, it becomes more difficult to negotiate. The response window may also be shorter. Notice #3 most often threatens a levy, meaning that the government may put a lien on your bank accounts or garnish your wages in order to get paid.
It’s never too late to try
Even if you’re not a client, send us any Georgia or IRS notices that you’ve received. We will review and let you know your options. In many situations, we can more effectively handle these on your behalf. We’re familiar with the communications, the process, and the government departments involved. Basically, we speak their language.
In the example of the misappropriated payments mentioned above, we contacted the Georgia Department of Revenue, reviewed payments and postings with the representative, and resolved the issue. In another much more complex situation, we were able to get a closed case reopened while we work through multiple years of taxes and payments. Sometimes we can even get the government to waive fees and fines.
Don’t get intimidated or frustrated
The IRS processes over 200 million tax returns annually. Whether at the federal or state level, there is a tremendous amount of human intervention. That means mistakes will be made. When you get a notice, contact us first and immediately. We’ll help you investigate and respond, and where possible, make recommendations to minimize the chances of future issues.
Neal Bach, CPA