by Deborah Ritz
I’ve received a notice from the IRS that I owe more taxes from a previous year. I don’t think I do, what are my options?
The notice you received is a proposed change for a prior year.
These notices can be for any of the last three years but in most cases the notice is for the previous year.
Also, in most cases the income in question is already stated on the return for that year but not in the form the IRS is looking for.
They are basically asking for clarification on the way the income was reported.
Your best options are:
1. If you paid someone to prepare the return in question contact that person immediately, give the preparer a copy of the notice and ask that a copy of any correspondence between the preparer and the IRS be copied to you.
2. If you prepared the return yourself respond as quickly as possible with:
• An agreement to the additional amount and a check for as much as you can afford with a request for an installment plan if necessary
• A disagreement to the changes with documentation that shows the IRS where the income was reported
• A request for more time to research the return in question followed by one of the two options above after you determine if the notice is correct or not.
Never delay or ignore sending a response to the Proposed Notice, it will quickly become a Notice of Deficiency which if not responded to, can only be challenged by filing a petition with the US Tax Court.
If that filing deadline is missed you will get a bill with penalties and interest along with an information sheet stating the IRS is entitled to seize your assets and freeze your bank accounts until the debt is paid.
Questions for Deborah Ritz can be e-mailed to The Weekly Adirondack at WeeklyADK@yahoo.com