IRS letter (notice)

This final notice before the IRS levies informs taxpayers of the government's intention to seize property or rights to property as payment for taxes owed. Understanding the rights and responding within 30 days is crucial to prevent levy actions.

Common issues: Difficulties in understanding how to appeal the levy, negotiating a payment plan, or proving that the levy would cause financial hardship.

Professional help can be crucial in navigating these negotiations and legal options.

Notifies taxpayers that a previous levy on wages or bank accounts has been released, restoring access to these assets. It's important to ensure no further levies are pending or address underlying tax issues that could lead to future levies.

Common issues: Ensuring that the levy has been properly released and dealing with any remaining consequences or financial issues resulting from the levy.

Tax professionals help ensure that all records are updated and any financial damages are addressed.

Requests additional information to process a tax return accurately. This letter often relates to discrepancies in reported income or tax credits. Responding promptly with accurate information is vital to avoid processing delays or adjustments.

Common issues: Difficulties in understanding what specific information is needed, gathering the requested documentation, and responding within the provided deadline.

A CPA / EA helps clarify the request and ensure that the response is complete and timely.

Sent when the IRS needs more information to verify identity before processing a tax return, typically to prevent fraud. Taxpayers need to respond quickly to verify their identity and prevent delays in their tax return processing.

Common issues: Navigating the identity verification process, which can be confusing and time-consuming.

A tax expert assists in swiftly resolving identity verification issues to avoid delays in tax return processing.

Informs taxpayers that they are under audit and outlines which parts of their tax return are in question. Prompt, accurate responses and proper documentation are key to resolving the audit efficiently.

Common issues: Understanding the scope of the audit, preparing the necessary documentation, and representing oneself effectively during the audit process.

Professional help is crucial in preparing for and navigating the audit.

Indicates that a tax return is under review and any refund will be delayed. Understanding what additional documentation might be required to verify claims on the return can expedite the process.

Common issues: Uncertainty about the duration of the review and what actions, if any, need to be taken.

CPAs help determine the cause of the hold and expedite the release of the refund.

Alerts employers that an employee’s W-4 form may be filled out incorrectly, potentially leading to improper withholding. Employers and employees must review and correct form discrepancies to avoid under-withholding penalties.

Common issues: Understanding how to correct the W-4 form and address the discrepancy.

Tax professionals provide guidance on proper form completion to ensure compliance.

Provides notice of a federal tax lien, a legal claim against property for unpaid tax debt. Resolving the debt or discussing payment options is crucial to remove the lien and protect assets.

Common issues: Addressing the lien, exploring options for release, withdrawal, or subordination, and navigating potential impacts on credit.

A tax expert assists in negotiating with the IRS and managing the lien's implications.

Informs taxpayers about proposed changes to their tax return and provides 30 days to respond. Understanding the changes and knowing how to challenge them is essential.

Common issues: Deciding how to respond, whether to agree, appeal, or request a conference.

CPAs help evaluate the IRS's findings and prepare a response.

Requests the taxpayer's presence at an interview regarding specific issues with their tax filing. Proper preparation for the interview, potentially with a tax professional, can help address any IRS concerns.

Common issues: Preparing for the interview, understanding what to expect, and effectively presenting your case.

Professional representation is beneficial in navigating the interview process.

Confirms acceptance of an installment agreement proposal, detailing payment terms and obligations. Compliance with the terms is necessary to prevent default.

Common issues: Understanding the terms of the agreement, ensuring the ability to meet payment deadlines, and knowing the consequences of default.

Tax professionals help manage the agreement and ensure compliance.

This letter, known as the Statutory Notice of Deficiency, gives notice about proposed taxes owed and the right to challenge these in Tax Court.

It is vital for receiving parties to understand their rights and the timeline to respond or file a petition if they disagree.

Common issues: Misunderstanding or overlooking the specific grounds for the IRS's proposed adjustments can complicate or undermine your ability to effectively contest them.

CPAs are essential in reviewing the notice, preparing for court if necessary, and ensuring all legal options are considered.