From an IRS notice, to an audit, to a collection appeals hearing – your IRS problems have definitely increased. If you do not agree with a ruling made by the IRS, you have every right to ask for an appeal. By filing an appeal, you are making it known that you do not agree with their ruling and are willing to discuss a resolution in an appeals meeting.

You may file appeals for:

• Interests and penalties
• IRS seizures, levies, and liens
• Rejected offers in compromise and terminations of installment agreements
• Trust fund recovery penalties and employment tax adjustments

Follow the guidelines and timeframes for what you’re appealing. Through this, your appeal is filed right in a timely manner.

Most of collection appeals are in response to an IRS audit. For example, your tax bill was increased after audit through the addition of penalties and interest and you don’t agree, so request an appeal. It’s imperative that you find out the guidelines and timeframe right away. If you don’t file the collection appeal correctly and get it submitted before the deadline, you might lose your chance for an appeal.

A tax debt collection appeal may be filed before the IRS enforces the seizure or levy. File the appeal right away as soon as you receive notice of an IRS levy or seizure, regardless if it’s verbal or written.

Filing a Collection Appeal the Right Way

Accomplish a collection appeal form explaining why you’re disputing the IRS decision and suggesting a resolution. A decision will be made by the appeals officer handling your case in five days.

What to Expect

Collection appeal hearings are normally informal. This can be by phone or correspondence. You may choose to represent yourself or bring representation if a hearing is scheduled.

You will have big IRS problems when you don’t file a tax return. The Tax Code has certain timelines or statutes of limitations set out that allow the IRS to pursue nonfilers.

Criminal: If you are found within six years of the date that the tax return was due, you’ll be facing criminal charges from the IRS.

Civil: Penalties and interest will be escalating on your tax debt forever because civil penalties can be demanded from you without a time limit.

IRS policy: The IRS does not usually pursue a nonfiler after 6 years from the filing deadline.

It’s a crime not to file a tax return, punishable by a fine of $25000 a year and a one-year prison sentence for every unfiled year.

There’s no criminal penalty if you owe taxes but filed your tax return. Your unpaid taxes will be assessed penalties and accumulate interest, however.

Nonfilers are pursued through:

• IRP or computerized Information Returns Program. Your information documents are matched against tax returns you’ve filed with the software. A TDI or Taxpayer Delinquency Investigation will be done if the IRS can’t find any indication that you filed a tax return. You will receive notices from the IRS, then telephone calls or even more letters, and finally a revenue officer will start searching for you.
• Nonfilers are contacted in 4 ways. If you do not respond to 1 method, the other methods will be tried:
  • Written notice from Service Center – 3 within 16 weeks
  • A taxpayer service representative will contact you and give you a deadline.
  • Telephone call or visit from revenue agent or officer – deadline and offer of assistance to file your returns will be given (Note: It’s legal for the IRS to prepare your tax returns.)
  • Visit from a special agent – subject to criminal investigation

A correspondence audit through the mail is commenced when a questionable item on your tax return is uncovered by the IRS computers. You’ll be informed of the discrepancy on an IRS notice and you will be requested to submit documentation to support your return. If the error is mathematical, you will be requestd to pay additional taxes or be given a refund.

You should always cooperate with a correspondence audit and be very happy that you weren’t chosen for a face-to-face audit. Remember that it’s very important to keep copies of your return and any attached documents just for audit or other IRS problem purposes.

The IRS makes mistakes, so don’t automatically mail the additional taxes demanded without further inquiries on your end. Verify the corrections by comparing a copy of the tax return with the information on the IRS notice.

Follow the instructions on the IRS notice promptly. It is more trouble than it’s worth if ignored.

Sign and date the IRS notice and send it with the payment if you agree with it. If you disagree with it, follow the instructions on the notice. Do this within the stated due date. Attach copies of documentation that will support your position.

If you disagree with the notice, the IRS will evaluate your claim, and if it’s allowed, you’ll be contacted and the audit with cease. If the claim is disallowed, the IRS will send an Examination Report to you, giving you 30 days to accept the changes and sign it or ask for an appeal.

The name and telephone number of the auditor handling the case will be on the IRS notice, so you may contact him for queries about the audit.

Many queries can plague you if you have IRS problems: Are there errors in my tax return from an IRS computer audit? Do I need to pay more money to the IRS? Am I going to get an IRS notice?

The IRS doesn’t have the manpower to personally audit every taxpayer, so it uses the IRS computer system to review tax returns and send notices. If an error was found on your tax return, you will receive a notice telling you of it and you may be required to pay more money or given a refund, which is not likely. Interest and penalties will be on the balance due. The IRS computers use information from its own files and from other sources.

There are more than 300 kinds of IRS computer notices, commonly:

• Claims you failed to file your tax return – The IRS computer will tell if you filed a return as required.
• Claims you did not report all your income – By scanning its files and comparing information, the IRS computer can tell if you reported all your income.
• Claims you made a math or clerical error – Clerical and math errors are verified when the IRS computer checks your tax return.

Write to the IRS right away and ask for a correction if you receive any of the 300 notices from the IRS and it’s not correct. Don’t hesitate to ask the IRS if you do not agree with their calculations. Most importantly, keep copies of all IRS correspondences in your records.

If you got a notice and indeed owe the IRS money, you have a month to pay before you will start getting the “500 series”, a series of computer-generated bills. You will be reminded that you have tax debt with a CP-501, your immediate action is required through a CP-503, and threatened with a levy if you do not respond immediately with a CP-504.

The IRS issues related to IRS correction notices are many. The IRS sends out about 300 kinds of notices. Anything from not filing a tax return to errors merits any of these notices. The list of common notices can be seen below.

When you receive an IRS correction notice, read it carefully. It’ll probably need a response by a specific deadline. Under no conditions should you dismiss this notice. You would create even more IRS problems if you do. Compare the details on the notice with a copy of the tax return if it’s about an error on the return. It’s not advisable to pay the taxes requested automatically. The IRS can make mathematical mistakes too.

If you do not agree with the notice, put it in writing. You have 60 days from the date of the notice to respond. The letter should include a copy of the notice. Only the IRS can abate additional taxes.

Sometimes information such as Taxpayer Identification Number or other documents is all the notice is about, so send it right away. Duplicate any documents. Keep the originals for yourself.

If it is a simple matter of a change in your account without taxes owed, a response is not needed.

The IRS correction notice must be read carefully and if you have questions, contact the person indicated on the notice. Most IRS correction notices are quickly resolved.

Common IRS notices are these:

• Balance Due – no math error
• Balance Due – math error (overpayment of at least $1)
• Balance Due – reminder notice
• Balance Due – urgent notice
• Overpaid tax applied to other taxes you owe
• Notice of Proposed Adjustment for Under/Overpayment
• Notice of Default on Installment Agreement
• Final Notice – levy on Social Security benefits
• Final Notice – Notice of Intent to Levy and Notice of your right to a hearing

An IRS correction notice is not a cause for panic. Our company and our staff can help you figure this out, as well as all your IRS problems.