Why Is the IRS Saying I Owe Them Money?

Understanding IRS Notices and Letters

When you receive a notice or letter from the IRS, it’s important to understand why you’re being contacted. The IRS sends correspondence for various reasons, including:

• You have an outstanding balance due.
• You’re due a larger or smaller refund.
• The IRS has questions about your tax return.
• The IRS needs to verify your identity.
• The IRS requires additional information.
• The IRS has made changes to your return.
• The IRS needs to notify you of delays in processing your return.

Responding to IRS Notices and Letters

1. Read Carefully:

Thoroughly review the notice or letter to understand the specific reason for the contact. If the IRS has made changes to your return, compare the information provided in the notice or letter with your original return.

2. Respond Promptly:

If the notice or letter requires a response by a specific date, it’s crucial to comply to minimize additional interest and penalty charges and preserve your appeal rights if you disagree with the information. Respond as indicated on the letter or notice, which may include mail, fax, or digital submission through the IRS’ Documentation Upload Tool.

3. Pay if Possible:

Even if you can’t pay the full amount you owe, pay as much as you can. You can pay online or apply for an Online Payment Agreement or Offer in Compromise. Visit the IRS payments page for more information.

4. Keep a Copy:

Retain a copy of all notices or letters with your tax records for future reference.

Contacting the IRS

You only need to contact the IRS if you disagree with the information, if the IRS has requested additional information, or if you have a balance due. You can find the IRS contact phone number on the top right-hand corner of the notice or letter. You can also write to the IRS at the address provided in the notice or letter. Allow at least 30 days for a response.

IRS Notice and Letter Numbers

You can find the notice (CP) or letter (LTR) number on either the top or the bottom right-hand corner of your correspondence.

Common Reasons for IRS Notices

1. Balance Due:

• You may have underreported your income or overstated your deductions.
• You may have claimed credits or deductions that you’re not eligible for.
• You may have made a math error on your tax return.

2. Refund:

• You may have overpaid your taxes.
• The IRS may have made an error in your favor.

3. Questions about Your Tax Return:

• The IRS may need clarification on specific items on your return.
• The IRS may request additional documentation to support your claims.

4. Identity Verification:

• The IRS may need to verify your identity to prevent fraud.

5. Additional Information:

• The IRS may need additional information to complete the processing of your return.

6. Changes to Your Return:

• The IRS may have made changes to your return based on the information they have.

7. Processing Delays:

• The IRS may notify you of delays in processing your return due to various factors.

What to Do If You Disagree with the IRS

If you disagree with the information in the notice or letter, you have the right to appeal. You can request a review by an IRS manager or a Collection Due Process hearing.

Getting Help

• Taxpayer Advocate Service
• Third Party Authorization
• Low Income Taxpayer Clinics (LITC)

Additional Resources

• Taxpayer Bill of Rights
• Tax Tools
• Taxpayer Guide to Identity Theft
• Affordable Care Act
• Statutes of Limitations for Assessing, Collecting, and Refunding Tax

Understanding why the IRS is contacting you is crucial for resolving tax issues promptly and effectively. By following the steps outlined above, you can respond appropriately to IRS notices and letters, ensuring that your tax obligations are met and your rights are protected.