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How to Handle a Tax Notice (“Bill”)
October 7, 2020   |   Collection, Form 1040, IRS, Tax Due, Tax Forms, Tax Resources

woman setting at computer desk holding her head

It’s Tax Notice season, IRS, State and Local Tax Districts are issuing those wonderful “love letters” for tax due . . . questions:

1.Is the Notice legitimate?

2.Is it Correct?

3.How to respond?

Legitimacy: If the Tax Notice (“Bill”) has spelling or grammar errors, asks for payment in bit coin or cash cards or threatens arrest– BEWARE!! Notice may not be legitimate. Double check (e. g. google verify) the telephone number listed. Does it belong to the organization? Legitimate tax agencies have an error free Notice that explicitly asks for a response and does not threaten arrest. Delete any emailed Tax Notices.

Correctness: Never assume a Notice is correct. Mistakes happen. Example: A few years ago, Ohio Taxation wrongfully counted tax exempt income as taxable and billed taxpayers for the difference.  If not sure a tax notice is correct, ask a tax professional to review.

Response:Prompt! These bills DO NOT GO AWAY.  In most cases, taxpayers have 30 days from the Notice date to respond. Send a letter.  Attach a copy of the Notice. Indicate why the Notice is incorrect and attach the supporting information (calculations, tax law etc).  If can’t pay or can make payment after a certain date indicate and give reason why. Mail the response to the Notice address via certified mail return receipt (Green Signature Card) or delivery confirmation. Keep a copy of your response for your records.

Why respond?  If the tax agency receives no response, it assumes the Notice (“Bill”) is correct. The bill is sent to collection. Interest compounds monthly (How much did you want to owe?).  Liens, levies (seizures) and garnishments are possible.  In some instances, the Tax Agency will stop collection or stop assessing interest or write off the bill if they know that COVID or other hardships apply. . .

So when it comes to Tax Notices, check for legitimacy, correctness and respond promptly. Best.

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