If you are anything like me, getting mail is a little like receiving a wrapped present: “What is it? What’s new today?!” As you flip through the stack of envelopes, you see one that looks official, and it’s from the IRS or a state taxing authority. Your initial excitement goes from anticipation to anxiousness. You open the envelope, and there it is . . . a dreaded tax notice. What are you going to do now?
First and foremost, don’t panic. Not all notices are asking for more money. Some notices may be a confirmation that a previously submitted return, letter, or payment has been received. Others may be simply asking for additional information or providing you with an explanation of why an adjustment was made to your taxes—this may even result in a refund! Then, there are those notices which want you to pay additional tax, or worse—notify you of an audit!
Regardless of the purpose of the notice, don’t ignore it. If you receive a notice:
- Verify all the information on the notice: Name(s) and address, identification number(s), type of tax, etc. Check this information against your records, even if you received a refund (keeping in mind that a refund today may be the result of an adjustment that will lead to additional tax in the future). Also, watch for inconsistencies that may be an indication of a scam.
- Decide how you are going to respond. Is this something you want to handle, or should you get some guidance from professionals? Either way, be sure to respond by the date requested on the notice. If you need additional time, contact the issuer to request an extension. This will convey a sense of cooperation.
- Always share all tax-related communications with your tax advisor. Any adjustments to tax, refunds, or allocations of overpayments may affect future returns.
Wipfli’s financial institution tax specialists are available to assist you in preparing a response to any number of tax notices you may receive. Having us assist will ensure that the matter is handled skillfully and in terms that should be clear to the tax authorities. If you receive a tax notice, please contact your Wipfli tax specialist or your relationship executive or email WipfliFIPractice@wipfli.com.