![]() The IRS believes that you owe back taxes. The IRS believes that you underpaid or overpaid your taxes. The IRS has made changes or corrections to your tax return. The information on your tax return doesn’t match the IRS’s own records. The IRS sends letters for numerous reasons, most of which are related to a recent or past tax return. Why Does the IRS Send Letters to Taxpayers? To resolve your issue, you first need to understand how to respond to that IRS letter. It’s important to understand that the IRS generally isn’t looking to bring down the hammer on honest taxpayers, even if mistakes were made. ![]() The IRS sends millions of notices to taxpayers every year, and most are simply intended to clarify a discrepancy or amicably settle a tax dispute. How do you respond when the IRS is telling you that you owe back taxes, are receiving an audit, or are in danger of a tax lien? You can modify it and reuse it.A letter from the Internal Revenue Service can be a scary thing. The document is created before your eyes as you respond to the questions.Īt the end, you receive it in Word and PDF formats. Therefore, a penalty could be the result of taxes filed with any of these entities. These taxes collected by federal, state, and municipal governments. Taxes are levied on income, payroll, property, sales, capital gains, dividends, imports, estates and gifts, as well as various fees. Using certified mail gives the sender receipt that the letter was sent and received, in case of future dispute.ĭepending on whether federal, state, or city taxes are the subject of this letter, taxes are governed by laws on multiple levels of government, from federal to local. Once this letter is completed, it can be sent via certified mail, along with copies of any supporting documents, to the appropriate IRS office. However, depending on the circumstances and what the Requester has done to rectify the situation, the IRS may grant a complete cancellation of the penalty. Most commonly, the IRS will grant a reduction in the penalty. Finally, the taxpayer is able to specify what action they would like the IRS to take regarding the penalty. The taxpayer is able to explain why they believe the penalty was incurred and the actions they are taking to correct the error which would lead to a justified reduction in the penalty amount. The letter specifies the tax form that incurred the penalty, a copy of which is generally included with this letter to expedite the IRS review process. The letter also includes information that will help the IRS identify the source of the penalty and the reasons why it should be reduced. The letter includes important identifying information, such as the taxpayer's name, address, and social security number or employer ID number. This document includes all of the information necessary for a taxpayer to request that their tax penalty be reduced. This letter helps a taxpayer argue their case for why they believe a reduction in the amount of a penalty or a total cancelation of the penalty is justified. Tax penalties are assessed for many reasons and, similarly, there are many reasons in place for a penalty that is unjust or too high be reduced. An IRS Penalty Response letter is a document used to file a request with the IRS that a penalty levied against a taxpayer, either an individual or a business, be reduced or canceled.
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