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Individual Taxpayers: Seven Things to Do When an IRS Letter Arrives

The IRS mails millions of letters to taxpayers every year for many reasons. Here are seven simple suggestions on how individuals can handle a letter or notice from the IRS:

1. Don’t panic. Simply responding will take care of most IRS letters and notices.
2. Read the entire letter carefully. Most letters deal with a specific issue and provide specific instructions on what to do.
3. Compare it with the tax return. If a letter indicates a changed or corrected tax return, the taxpayer should review the information and compare it with their original return.
4. Only reply if necessary. There is usually no need to reply to a letter unless specifically instructed to do so, or to make a payment.
5. Respond timely. Taxpayers should respond to a letter with which they do not agree. They should mail a letter explaining why they disagree. They should mail their response to the address listed at the bottom of the letter. The taxpayer should include information and documents for the IRS to consider. The taxpayer should allow at least 30 days for a response.

When a specific date is listed in the letter, there are two main reasons taxpayers should respond by that date:

  • To minimize additional interest and penalty charges.
  • To preserve appeal rights if the taxpayers doesn’t agree.

6. Don’t call. For most letters, there is no need to call the IRS or make an appointment at a taxpayer assistance center. If a call seems necessary, the taxpayer can use the phone number in the upper right-hand corner of the letter. They should have a copy of the tax return and letter on hand when calling.

7. Keep the letter. A taxpayer should keep copies of any IRS letters or notices received with their tax records.

Additional IRS Resources:

Source: https://www.irs.gov/newsroom/individual-taxpayers-seven-things-to-do-when-an-irs-letter-arrives

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National Tax Security Awareness Week No. 5: Small Businesses: Be Alert to Identity Theft

The IRS, state tax agencies and the nation’s tax industry joined together to warn small businesses to be on-guard against a growing wave of identity theft against employers.

Small business identity theft is a big business for identity thieves. Just like individuals, businesses may have their identities stolen and their sensitive information used to open credit card accounts or used to file fraudulent tax refunds for bogus refunds.

The Internal Revenue Service, state tax agencies and the private-sector tax community — partners in the Security Summit — are marking “National Tax Security Awareness Week” with a series of reminders to taxpayers and tax professionals. The week concludes with warnings about small business identity theft.

In the past year, the Internal Revenue Service has noted a sharp increase in the number of fraudulent Forms 1120, 1120S and 1041 as well as Schedule K-1. The fraudulent filings apply to partnerships as well as estate and trust forms.

Identity thieves are displaying a sophisticated knowledge of the tax code and industry filing practices as they attempt to obtain valuable data to help file fraudulent returns. Security Summit partners have expanded efforts to better protect business filers and to better identify suspected identity theft returns.

Identity thieves have long made use of stolen Employer Identification Numbers (EINs) to create fake Forms W-2 that they would file with fraudulent individual tax returns. Fraudsters also used EINs to open new lines of credit or obtain credit cards. Now, they are using company names and EINs to file fraudulent returns.

As with fraudulent individual returns, there are certain signs that may indicate identity theft. Business, partnerships and estate and trust filers should be alert to potential identity theft and contact the IRS if they experience any of these issues:

  • Extension to file requests are rejected because a return with the Employer Identification Number or Social Security number is already on file;
  • An e-filed return is rejected because of a duplicate EIN/SSN is already on file with the IRS;
  • An unexpected receipt of a tax transcript or IRS notice that doesn’t correspond to anything submitted by the filer.
  • Failure to receive expected and routine correspondence from the IRS because the thief has changed the address.

New Procedures to Protect Business in 2018

The IRS, state tax agency and software providers also share certain data points from returns, including business returns, that help identify a suspicious filing. The IRS and states also are asking that business and tax practitioners provide additional information that will help verify the legitimacy of the tax return.

For 2018, these “know your customer” procedures are being put in place that include the following questions:

  • The name and SSN of the company executive authorized to sign the corporate tax return. Is this person authorized to sign the return?
  • Payment history – Were estimated tax payments made? If yes, when were they made, how were they made, and how much was paid?
  • Parent company information – Is there a parent company? If yes, who?
  • Additional information based on deductions claimed
  • Filing history – Has the business filed Form(s) 940, 941 or other business-related tax forms?

Sole proprietorships that file Schedule C and partnerships filing Schedule K-1 with Form 1040 also will be asked to provide additional information items, such as a driver’s license number. Providing this information will help the IRS and states identify suspicious business-related returns.

For small businesses looking for a place to start on security, the National Institute of Standards and Technology (NIST) produced Small Business Information Security: The Fundamentals. NIST is the branch of the U.S. Commerce Department that sets information security frameworks followed by federal agencies.

The United States Computer Emergency Readiness Team (US-CERT) has Resources for Small and Midsize Businesses. Many secretaries of state also provide resources on business-related identity theft as well.

The IRS, state tax agencies and the tax industry are working together to fight against tax-related identity theft and to protect business and individual taxpayers. Everyone can help. Take steps recommended by cyber experts and visit the Identity Protection: Prevention, Detection and Victim Assistance for information about business-related identity theft.

Source: https://www.irs.gov/newsroom/national-tax-security-awareness-week-no-5-small-businesses-be-alert-to-identity-theft

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Get Ready for Taxes: IRS.gov Offers Free Tax Help

As tax filing season approaches, the Internal Revenue Service encourages taxpayers to visit IRS.gov first for tax tools and resources before calling. Nearly every tax issue can be resolved online.

The recent IRS website redesign makes it easier for people to navigate IRS.gov. The front page is more task-based so actions like paying a tax bill, getting a tax record or checking refund status are easily accessible.

The IRS has also simplified the main navigation tool, added more drop-down menus and made it more mobile-device friendly.

Additionally, the IRS has a special page on IRS.gov with steps to take now for the 2018 tax filing season.

IRS.gov provides many self-service tools and features, including:

  • Where’s My Refund. Taxpayers can check tax refund status 24/7. Updates daily.
  • Get Transcript. Access various transcript types online. Taxpayers may also ask the IRS to mail a Tax Return Transcript to them by requesting it online or by calling 800-908-9946. Allow 5 to 10 days for delivery.
  • Direct Pay. Make tax payments directly from a checking or savings account. People can view their account balance if taxes are owed.
  • Electronic Federal Tax Payment System. EFTPS is convenient and easy. Taxpayers and businesses can use it for various types of federal tax payments including estimated tax payments.
  • Online Payment Agreements. Eligible taxpayers can pay their taxes by easily setting up a monthly payment plan.
  • Answers to Tax Law Questions. The Interactive Tax Assistant takes people through a series of questions and provides the answers.
  • Forms, Instructions and Publications. Taxpayers can download and view popular tax forms, publications and instructions anytime. Increasingly popular eBooks are available as well as PDF and HTML versions. Accessible versions for people with disabilities and prior year forms are also available.
  • Where’s My Amended Return. Taxpayers can track the status of an amended return.

Employers and self-employed taxpayers will find many useful features on IRS.gov as well. The self-employed individuals tax center is a tax resource available around the clock. People can:

Business owners can find free small business tax workshops and seminars at various locations around the country.

Use the Understanding Your IRS Notice or Letter page to get more information and answers to many notice-related questions related to IRS notices and letters.

The Let Us Help You page on IRS.gov provides online tools and resources related to:

  • Identity Theft, fraud and scams
  • Links to help taxpayers determine who needs to file and options to e-file.
  • Assistance with renewing an expiring Individual Taxpayer Identification Number (ITIN) should visit the ITIN information page on IRS.gov.

Source: https://www.irs.gov/newsroom/get-ready-for-taxes-irsgov-offers-free-tax-help

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