What to do if you receive a letter from a taxing authority
Because tax returns are randomly reviewed, you might receive a notice by mail this year from a taxing authority about your return. If you do, know that many different items can trigger these inquiries. Here are some survival tips:
– Don't assume they are correct; they might not have all of the facts that pertain to your particular situation.
– Speak with your tax preparer about the exact item they are questioning.
– Gather all pertinent, supporting documents and the return that the letter relates to. Verify what was or wasn't reported.
– Don't pay the balance until you review all of your records and decide whether you agree or disagree with the letter.
– Be sure to respond to any stated deadline. If you need more time to get your documents together, ask for an extension of time to respond. This will not go away, so follow up on any issue that they are questioning.
– Lots of different things can trigger these inquiries: a home sale, capital gains, interest, dividends, mileage deductions, forms (i.e., 1099 or w-2) that you hadn't received before filing, self-employment expenses, unreimbursed employee expenses, etc.
– Keep a copy of everything that you send in. Be sure to make notes about your response and date the items in your file.
– If you call for any reason, keep a log with the date, time, person's name and ID#.
– You will wait sometimes more than 60 days for a response from the taxing authority. It's not over until you reach an agreement. Just keep the correspondence going until the issue is resolved.
Diann West is an Enrolled Agent with H&R Block JHT LLC, Kingsley.