Why Did I Receive This IRS Notice? and What to Do If You Receive an IRS Notice

Financial problems can be extremely stressful. If you owe back taxes, the pressure only worsens with mounting IRS penalties and interest accruing on your tax debt. Eventually, you might have aggressive collection actions pursued against you: the IRS can redirect your wages, take money directly from your bank accounts, and even seize your property.

But there is no need to let things go this far. Whether you are an individual, a small business owner, or an innocent spouse facing penalties tax resolution services in Washington or California can assist in representing you against the IRS. 

Our experienced IRS-tax preparer can help you navigate the complexities of the US tax code to find favorable solutions, get the IRS off your back, and save thousands of dollars on your taxes.  

  Why Did I Receive This IRS Notice?  

Most IRS notices explain why you received the notice in the middle of the letter. Here are some of the most popular reasons the agency sends out notices: 

• You owe delinquent taxes due to underpaying when you filed a tax return.  
• You have an unfiled tax return 
• The IRS has changed your tax return which resulted in a balance due or a refund.  
• The IRS has assessed interest or penalties on your unpaid balance.  
• The IRS is going to levy your assets for unpaid taxes. 
• The IRS has seized your tax refund for unpaid taxes. 
• The IRS has decided to audit your tax return.  
• The IRS has adjusted your return due to an audit.  
• The IRS has certified your tax return as seriously delinquent and sent the State Department a certification to revoke or deny your passport.  

Get Help With Unfiled Taxes

Have you got behind on your tax returns? Looking for help filing back taxes? Whether you need help filing personal or business returns, the Seattle Legal Services, PLLC team can help.  

We will help you figure out which returns you need to file. Then, we’ll help you gather the right documents so that you can submit accurate returns. Finally, we’ll help you negotiate a payment plan, a settlement, or another arrangement with the IRS.  

A lot of people get behind on their taxes, but we know that every situation is different. That’s why we tailor our offerings to the unique needs of our clients. Contact us today to get personalized, empathetic help for your tax problems.

What to Do If You Receive an IRS Notice 

Steps if you receive an IRS notice: 

• Make sure the notice is legitimate.  
• Read it carefully, and if you don’t understand, call the IRS or contact a tax pro for clarification.  
• Review your options — Most IRS notices outline steps you can take, but the exact steps vary based on the type of notice.  
• Note any deadlines on the notice — There are strict deadlines for replying to audit requests, contesting assessed taxes, appealing collection actions, or making arrangements before the IRS moves forward with a tax levy.  
• Decide how you’re going to respond to the notice.  

Never ignore an IRS notice. In most cases, the agency will send you several notices about past due balances before moving forward with collection actions, but to ensure there are no impending collection actions, you should always review every notice carefully.  

Tired of receiving IRS notices? Then, contact a tax pro. You can grant them Authorization form to receive your confidential information on your tax account,  so they can receive notices from the IRS to you and they can assist with keeping an eye on your tax account, they can receive notices, and help you make the best option for you.

Do You Need to File Taxes?

Not everyone needs to file taxes. You only need to file a tax return if your income is above the standard deduction for your filing situation or if you meet one of the special rules noted below: 

• You’re filing as married filing separately, and your income is over $5. 
• You owe alternative minimum tax (AMT).  
• You owe FICA taxes on unreported tips. 
• You owe household employment taxes.   
• You have over $400 in net self-employment income.  
• You owe an early withdrawal penalty from an IRA or 401(k).  

In some cases, the IRS may generate an SFR or send you a notice to file for a year that you aren’t required to file. In that situation, send the agency a letter explaining why you didn’t need to file for that year.  

Consequences of Unfiled Returns If You Don't Owe Taxes

If you forgot to file a tax return this year or if you haven’t filed for years, you’re probably wondering what is going to happen.

 In most cases, you can fly under the radar for a while, but eventually, the IRS will catch up with you, and the consequences can be severe.  

This guide outlines filing requirements and what to expect if you don’t file. Then, it gives you tips on how to catch up with back taxes. To get help now, contact us today at Speedy Tax Resolution Inc.  

If you don’t file your tax return and you owe taxes, the IRS may issue a substitute for return (SFR). When the IRS generates SFRs, it doesn’t give you any deductions or credits, and in most cases, this leads to an inflated tax liability.  

If you don’t respond to a Substitute for Return (SFR), the IRS will finalize the tax assessment, and then the agency may do the following to collect the tax: 

Issue federal tax liens against your real and personal property. 

Levy (seize) your bank accounts or property. 

Garnish your wages. 

 Additionally, once the IRS assesses a tax against you, the agency will add on penalties and interest. Both the penalties and interest will be back-dated to the due date of the return.  

To give you an example, imagine that your 2021 tax return was due April 19, 2022. You didn’t file, and in 2023, the IRS issued an SFR which shows a tax liability of $10,000. The IRS will backdate the failure-to-file penalties to the filing deadline. These penalties are 5% per month, and they can get up to 25% of your balance, bringing your bill up to $12,500. Interest will go on top of that amount.

How to File Past Due Tax Returns 

Dealing with one tax return can be stressful.  A lot of people feel worried and anxious around tax time.  If your dealing with years of unfiled returns this feeling is amplified.  Here’s some great news — in most cases, the IRS only requires you to go back six years. There are certainly exceptions to this rule, but generally, if you file the last six years of returns, the agency will consider you to be compliant. Follow these tips to catch up on unfiled returns:  

1. Get tax forms from the right years.  

To file past-due returns, you need the tax forms from the years you missed. The IRS updates these forms annually so to ensure you get the right credits and deductions, you need to use the right form. Also, make sure that you’re using state tax forms from the appropriate years.  

2. Find proof of income. 

Perhaps you didn’t file but you have all of your W2s and 1099s neatly in a folder. If so, it’s time to drag that out. However, that’s usually not the case — Most people with unfiled returns have no idea where their documents are. To get your old income documents, try contacting the payers.  

For instance, ask previous employers for old W-2 forms and banks for 1099-INTs. If you can’t get these forms from the payers.  A tax professional can help you get accurate wage transcripts.  

3. Figure out deductions.  

If you plan to itemize, you need to gather information about your deductions. This includes qualifying mortgage interest, medical expenses over a certain threshold, charitable donations, and state and local taxes. Even if you don’t itemize, you may qualify to take deductions for retirement contributions, student loan interest payments, and other above-the-line deductions.

4. Gather information about tax credits. 

Tax credits are extremely valuable, and you don’t want to miss out on them when you file your tax return. Common credits include the child tax credit, the credit for other dependents, and education credits such as the American Opportunity Tax Credit and the Lifetime Learning Credit. You will need different types of documentation depending on the credits you are eligible for.   

5. Calculate business income. 

Small business owners and freelancers will need to calculate their business income. If you have bookkeeping records or a dedicated business bank account, this process is relatively straightforward. If not, you will need to find ways to accurately calculate your revenue and expenses. 

To ensure that you file everything correctly and to minimize the risk of problems, consider working with a tax professional. They can help you figure out which returns you need to file, and they can also help you decide if you need to use the IRS’s voluntary disclosure programs or if you can just file late.   

How to Pay Back Taxes From Unfiled Returns

A lot of people don’t file because they don’t want to deal with the amount owed. If you haven’t filed for years, it can be scary to think about how much the amount will be if you submit multiple returns all at once.  

Conveniently, the IRS has options for taxpayers in this situation. If you file and can’t afford to pay in full, you should consider the following: 

• Installment agreement — Take up to six years or until the collection statute expiration date to pay off your tax bill in monthly payments.   

• Offer in compromise — Pay a lump sum (or 24 months of payment) to settle your tax bill for less than you owe.  

• Currently not collectible — Prove hardship so that the IRS temporarily stops collection actions against you.  

You should also ask for penalty relief. Depending on the situation, the IRS may be willing to remove penalties from your account.