Will The IRS Send You A Letter If You Owe Money

Will The IRS Send You A Letter

The Internal Revenue Service (IRS) is an U.S. federal agency that manages the collection of taxes. People informally adverts to the IRS as the “tax man”. The Internal Revenue Service or the IRS sends a letter or a notice for a number of reasons. The reason might be about an issue on your federal tax return or account or it might be about the changes to your account.
The communication is quiet ambiguous. If you send your absolute tax return by the deadline, within a few weeks the IRS will send you any refund you are owed.

Why Would You Be Getting A Letter From The IRS?

IRS will send you a letter or a notice for several reasons. Like,

  • You have a balance on demand.
  • They have some queries about your tax return.
  • They have changed your return.
  • They want to make you know about the delay in processing your return.

This communication process is very fast and simple. The IRS doesn’t contact with you via email or social media. So, you need to be aware if anyone tries to contact with you as an IRS representative through email or social media.

When Does IRS Send You A Letter?

Generally, when a person receives a letter from IRS, he or she thinks that probably being audited. Nevertheless, a notice from IRS is not always a warning that he or she is being audited. As it is mentioned before that IRS sends you a letter when you owe money. Also, IRS generally gives deadlines and you need to be careful about the deadlines, otherwise you’ll have to give more money as penalty.

If the IRS sends you a “notice for tax due” letter, that means you haven’t paid the full amount of taxes, you owe. But if you think you have paid the total amount or the amount you think you owe is different from what IRS says, you have the right to file a case. But in that case you need to take that action very quickly otherwise you will lose your legal rights. In that case you’ll have to pay more as penalty as it is mentioned before.

Some Important Things You Need To Know About The IRS Letter

  • You shouldn’t be panicked. You need to respond carefully to the notice in time.
  • There are a lot of reasons why IRS sends you a letter. The letters will advert about the specific issue of your tax account. You might be told by the letter about the changes of your account or it you might be asked for some more information about your current account. You are needed to be clarified all these things.
  • Each notice will be specific with individual instructions.
  • If you do not agree with the notice, you need to write a letter, where you will have to explain why you disagree. You’ll be given one month to give your feedback.
  • You need to have all the copies of the notice you receive with you and other tax related documents.
  • You will not have to visit the IRS office for your queries. If you have any question to ask you can call the number which is mentioned in the upper right-hand corner of the letter.

What To Do After Receiving a Letter From IRS?

As it is mentioned earlier if IRS sends you a notice when you owe money, you need to pay that amount within the deadline given by them. But if you want to pay the due amount but can’t afford to pay it now, IRS gives you several plans that are mentioned below:

Monthly Payments – The IRS will let you have a longer period of time to pay the total amount you owe. That is considered as a “payment plan” as well as “installment agreement”. And if you qualify for a “streamlined” installment,

IRS will give you an advantage where you will not have to submit your financial information to IRS. You can apply it via online or through the mail or over the phone.

Here are some of the basic rules:

  • You must owe $50,000 or less than that.
  • You should be up-to-date with all your tax returns.
  • The procedure permits tax payers up to 72 months to pay their tax obligations.
  • If you are a self-employer, you should be current on your estimated tax payments.

In case, you can’t afford a monthly amount that would pay off your debt within 72 months, you can apply for an installment agreement, called “partial pay installment agreement”. In that case you are needed to provide some information about your income, expenses and assets but you won’t be able to apply online for this type of plan.

Offer in Compromise –If someone has a reasonable doubt about how much tax he /she owes, if he/she can’t pay the full amount or full payment may cause a financial hardship, then for them there is a plan called offer in compromise”.

Here are some basic rules:

You need to be current.

If you don’t intersect with the low-Income guidelines, you’ll be charged a fee.

You need to provide/give the actual information about your Income, Assets and also expenses.

In case your offer is accepted,

You are needed to file all your tax returns for the next five years. Otherwise your offer will not be scheduled. You will be non-eligible to get your money back.

Federal tax liens are not released until you have come across your offer terms.

Some offer information is furnished for public review at IRS offices.

In case your offer is not accepted,

You may request within 30 days using Request for Appeal of Offer in Compromise, Form 13711.

Treasury offset program hardship

The advantageous fact is that the IRS contemplates a financial situation a ‘hardship’ when a taxpayer is unable to have deductible living expenses. Those tax payers who are having financial crisis or hardship might be able to acquire a diminution in tax debt.

Deductible expenses are those expenses essential to provide for a tax payer and his family’s health and welfare like food, house- keeping supplies, apparel and services, personal care products.

Hardship Relief for Tax Debt

The taxpayers who are having a tax debt and also experiencing a financial hardship have declaration option available. The offer in Compromise and Partial Payment Installment Agreement which are mentioned above are instances of IRS plans that allow for a diminution in the tax debt. Using a debt diminution plan, taxpayers with a hardship can acquire a permanent declaration while playing less than what they actually owe. The diminution amount will be depended upon the total income, assets and upon the total debt amount.

Those who are not able to pay even a decreased amount for a tax debt can hold IRS collection efforts by getting the status of CNC (Currently Not Collectible). They are only needed to pay their tax debt if their financial status gets improved.

What To Do To Check The Authenticity Of The Letter?

As it is mentioned before that IRS will not contact with you via email or social networking site. Apart from this you need to be careful about some facts that are mentioned below:

  • If it’s fake then there will be an angry demand for paying the amount immediately.
  • They will make you scare by alarming you for not-payment.
  • They will not give you any opportunity to question them about your doubts.
  • You will be compelled to pay the amount by a specific payment method, like a prepaid debit card, without giving you other payment option.
  • They will ask you to give your debit card number for immediate payment.

You must be careful about these facts to check the authenticity of the notice.

The notable fact is that when you owe a debt to the IRS, the IRS might claim on your property in case you don’t repay your debt. The IRS may also take property including wages and some other income.

If You Owe Money Because Of Your Spouse/ Ex-Spouse?

If you receive a letter from IRS because of owing money, you might think that it is being unfair with you your spouse or ex-spouse should have to pay.
In case you filed the tax return with your spouse/ ex-Spouse, you can qualify for a relief that is called “innocent spouse relief”.

When Will You Be Eligible For This Relief?

  • A joint return should be filed by you with your spouse/ ex-spouse.
  • This return (joint) should have an omission of income about which you did not know anything but your spouse or ex-spouse did.
  • You should not have any idea or depth about the knowledge.
  • The IRS will be agreed that’s it is fair to give you relief once the error has been identified
  • You need to apply for the relief within two years.

So, basically this communication is quite friendly. Every year millions of letters are sent by the IRS. So, if you get a letter, you do not need to be panicked. Just do not ignore the notice and follow the rules that are mentioned above to communicate with them. You just need to act timely as that will be helpful in reducing the penalty charge. And most importantly you don’t need to call or reply to them unless you are specifically instructed to do so.

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