What Not to Do When You Get an IRS Letter

There's nothing quite like the anxiety induced by an official letter from the IRS or your state's tax department.

The dread begins with the sight of the logo, the bureaucratic language, and that nagging fear that something might have gone wrong.

Before you let panic take over, pause and breathe.

In our experience, the anxiety surrounding IRS and state tax notifications often stems not from the letter itself but from the rapid reaction to it.

Here’s a strategic guide on what you should avoid if you receive a tax notice, demonstrating why taking a thoughtful approach is key.

Don’t Immediately Assume Fault

Each year, tax authorities dispatch millions of notices.

Many of these communications are merely:

Requests for additional information
Notifications of data mismatches
Inquiries about missing documentation
Accounting notices not reflecting recent payments

These letters typically seek confirmation or correction rather than serve as accusations. Jumping to negative conclusions only adds unnecessary stress without addressing the issue.

Don’t Dismiss It (Wishing It Disappears)

Disregarding a notice is one of the quickest ways to escalate a minor matter into a significant problem.

Not responding can lead to:

Missed deadlines for response
Accumulation of penalties and interest
Reduced options for resolution

This is relevant for both federal and state agencies. In fact, state administrations often act more swiftly and strictly than the IRS when deadlines are overlooked.

Avoid Calling Without a Strategy

This may surprise some, but contacting the agency without a clear understanding of the notice can:

Solidify incorrect assumptions
Lead to partial or inconsistent explanations
Complicate matters if the issue is more intricate than it seems

Tax agencies strictly follow procedures. Without preparation, a call could unintentionally muddle the situation rather than clarify it.

Don’t Rush to Pay to "Resolve" the Issue

This mistake is common and costly.

Remitting payment without verifying the notice may result in:

Overpayment
Overlooking credits or adjustments
Missing the window to contest errors

Once money is sent, rectifying errors becomes much more challenging.

Resist Filing an Amended Return in Haste

While amendments have their place, impulsively filing one can be detrimental.

They:

Require considerable processing time
May provoke additional scrutiny
Could introduce issues if not properly handled

Amendments should be judicious, not reactionary.

Don't Assume It’s a DIY Task

Some notices are straightforward, others more complex.

What might seem like a minor discrepancy could hint at:

Withholding inaccuracies
Reporting discrepancies
Problems with estimated tax calculations
Errors carrying forward from prior years

Tackling everything independently can increase stress—particularly when faced with strict deadlines and potential enforcement actions.

Effective Responses

Your approach should ideally include three steps:

Carefully read through the notice
Determine exactly what is being asked by the agency
Respond thoroughly and within the given timeframe

These actions are more easily executed with expert guidance, especially during emotionally charged times.

Final Thoughts

Getting an IRS or tax agency notice can feel daunting, but it need not be overwhelming.

Problems often arise not from the letter itself but from hasty, anxious responses or assumptions.

If you’ve received a tax notice, contact our firm before responding. If you're a valued client, involving us early lets us scrutinize the notice, verify the details, and work toward a resolution with minimal stress.

Important Note:

This article serves as a general educational resource and not as legal advice. Each tax notice is unique, and individual circumstances vary. For legal guidance, consult with a qualified attorney. For help in dealing with IRS or state tax notices, reach out to your tax professional.

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