Your taxes contain an array of sensitive information, from financial data to your Social Security number or tax ID number. Because of this, there are many scams that unsavory characters attempt to perpetrate by impersonating the IRS or another tax authority. It can be difficult to tell when the IRS is really seeking information versus when you may be the target of a scam.
To help you determine whether the letter you received is a scam or something you need to address, consider the following tips and information.
What Are the Next Steps If You Receive an IRS Letter?
If you receive a legitimate letter from the IRS, you need to take action to address whatever the IRS needs. There are many situations where the IRS is simply sending you a notice, and you may not have to do anything. However, if the IRS is requesting additional information, it is important to completely understand what they need and act quickly to address the letter.
Tax letters can be confusing because it may not be clear what the IRS needs or how you should get the information to them. As your tax professional, we will be able to help you decipher the tax letter and share the right information with the IRS. We are also better able to tell a legitimate letter from a scam as well.
It is of the utmost importance that you get in touch with your tax professional to determine the legitimacy of the IRS contact before any other steps.
Why Would You Receive a Tax Letter?
The IRS almost always initiates a conversation with a taxpayer by sending a letter first. That means that if the IRS needs to speak with you for any reason, you will receive an IRS letter in the mail. Keep in mind that phone calls or emails from the IRS without a corresponding letter are probably part of a scam, rather than a legitimate contact from the IRS.
Some of the most common reasons that the IRS sends letters are:
- You have a tax balance due
- The IRS has a question about your tax return
- Identification verification
- To notify you about a change in your tax return
- You are due a smaller or larger tax refund
- To get additional information about your taxes
- Notification about a delay in processing your return
Read the letter carefully to determine what the IRS needs and how you should respond to any tax problems. Some IRS letters do not require that you take any action.
How Often Does the IRS Send a Tax Letter?
The IRS sends literally millions of letters to taxpayers every year for various reasons. In most cases, the letters do not deal with audits. In fact, the IRS audits just 0.5% of all returns submitted, which amounts to approximately one million tax returns.
What Are the Methods of Communication That the IRS Uses to Contact Taxpayers?
In most cases, communication with the IRS will start with a letter. However, there are a few more time-sensitive situations where the IRS will use a different method of communication to initiate contact. Delinquent tax returns and overdue tax bills are the most common reason. The IRS can occasionally show up to your home or business unannounced to conduct an audit or as part of a criminal investigation. Note that these circumstances are rare; most contact starts with an IRS letter.
Keep in mind that the IRS will never ask for a specific type of payment method, and they do not request payment for overdue taxes over the phone.
How to Avoid a Tax Scam
IRS letters that are actually scams can seem legitimate, but they will generally have a few errors or omissions that signify that the letter is not official. For example, IRS letters will have an identifying number in the upper right-hand corner that matches a file with the IRS. If you call an official IRS number, you should be able to use that identifying number to talk with the right person. Double-check the number on your notice with phone numbers used for the IRS online.
Other things you can do to avoid scam include:
- Never give debit, credit, or bank account information out over the phone
- Never respond to social media or text messages; the IRS does not contact people in this way
- Check your tax account information online at IRS.gov
- Read your tax letter carefully to check for visible signs of errors or omissions
Being careful and not acting too quickly can help you avoid scams and further tax problems.
Remember: contact our office right away so we can put our tax and IRS expertise to work ensuring the contact you’ve received is legitimate.