Few pieces of mail cause more confusion and worry than a letter from the IRS. Even if you’ve filed correctly and paid on time, getting a notice showing more taxes, penalties, or interest can still make you think you did something wrong.
Can an IRS notice be wrong?
Yes. In fact, the agency has admitted to instances of taxpayers receiving bills for taxes they’d already paid.
For example, in June 2024, the IRS reported that some taxpayers received balance-due notices even though their payments had cleared their banks. Processing problems kept those payments from showing correctly on their tax accounts.
Processing delays can cause problems, too. If the IRS hasn’t finished processing a return, payment, or correspondence before an automated notice goes out, the notice may not reflect your actual situation.
A wrong IRS notice can still cost you
For you as a taxpayer, it’s more than just the amount that the notice shows. Even if you ultimately don’t owe additional tax, resolving an incorrect IRS notice can take time and money. You may need to gather old records, research payments, respond to the IRS, or ask a tax professional for help.
What should you do if you receive an IRS notice?
First, don’t panic, but don’t ignore it.
Read the notice carefully and check the tax year, the reason the IRS contacted you, and any deadlines for responding. Then, compare the notice with your tax return and payment records.
1. Check the tax year
Make sure you know which tax return or tax period the notice concerns. Pull that return and any related records so you can compare them with the notice.
2. Look for a response deadline
Some IRS notices require action within a specific period. Make note of the deadline, even if you believe the notice is wrong.
3. Compare the notice with your records
Check the notice against your tax return, payment confirmations, canceled checks, and other documentation. If the IRS says it hasn’t credited a payment, having proof of that payment will help you respond.
4. Send the entire notice to your tax professional
If a CPA or other tax professional prepared your return, send them every page of the notice. Pages that may not seem important to you can have information they need to figure out what happened and how to respond.
5. Don’t automatically pay the amount shown
An official-looking IRS letter can make you want to pay it and be done with it. But if you think that the notice is wrong, follow the instructions for responding or disputing it and provide supporting documents.
Need help with an IRS notice?
The IRS is supposed to collect the right amount of taxes and communicate accurately. But that doesn’t always happen. It’s important to take IRS notices seriously. But it’s equally important to review those notices carefully and not just assume the government got it right.
If you received an IRS letter and aren’t sure what it means or how to respond, let Casey Peterson’s tax professionals help you review the notice and determine your next step.
Zach Van Sambeek, CPA, PFS, CVA
Zach Van Sambeek is a CPA, Certified Valuation Analyst, and Shareholder who has been with Casey Peterson, LTD since 2015. He’s a member of AICPA, the South Dakota CPA Society, and the National Association of Certified Valuation Analysts.
