So…you just sat down to open your mail and you see that dreaded letter from the IRS (or from your state’s department of taxation)…what do you do? Panic? Call the IRS? Call your CPA or attorney in a panic?
No, no, and no.
Here are the top three things that you should not do:
1) Do not ignore the letter/notice. The IRS and your state’s taxation department are fully computerized and the issue will never go away by itself. You must have your CPA or attorney respond in a timely fashion in order to avoid judgements, warrents, liens, and levies (see the difference between liens and levies here: Tax Liens vs. Tax Levies).
2) Do not call the IRS or your state’s department of taxation yourself. Your CPA should be the one to make the call or write the letter. Communications with the IRS and with state taxation departments needs to be clear, concise, and void of all emotion. Calling yourself will almost always result in divulging too much information, confusing the IRS telephone representative, and ultimately end in frustration as you are left on hold, transferred, etc. Stay calm and contact your CPA or attorney so that they can take care of the issue for you.
3) Do not call your CPA or attorney up in a panic. Without seeing the letter or notice, there is very little they can do for you and the last thing any CPA or attorney wants to do is sit on the other end of the phone while you attempt to read them whatever portion(s) of the letter/notice you feel are important. The proper way to handle the situation is to calm down, fax or scan & e-mail a copy of the notice to your CPA or attorney (or if the letter/notice does not indicate that an immediate response is required, you can mail a copy), allow your CPA or attorney a couple of days to research the matter, and then let them correspond directly with the IRS or your state’s department of taxation.
Keep in mind that your CPA or attorney have most likely helped other clients get out of similiar situations in a very pain-free manner. They are best equipped to handle issues like this and are able to do so with ease assuming you fully cooperate and provide them with all the details and documentation that they request.
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Great advice Mike! I’ve had the dreaded IRS notice sitting on my desk to be faxed to the CPA only for my CEO spotted and begin to panic. I always do the same thing when I receive a notice from the IRS or state tax department. Read it, fax it to the CPA and then pick up the phone to let them know it’s on its way. If there is a short respond date, I do share that with the CPA right away so that they have the most time possible to respond. Thank you for sharing this!