What to do if you receive a "dreaded" letter from IRS?

By Attorney Joseph Meissner

Mr. Nguyen—who has a limited English speaking capability--has filed his family’s tax return. He has used a paid tax preparer. It is now three months later. He is expecting a large refund which includes an EITC payment; he needs this refund to pay the family bills. Then one afternoon, he receives a letter from IRS. This does not contain his green colored check for his refund. In fact, as near as he can tell RS is denying his refund and challenging his return. What should he do?

Here are TEN RECOMMENDATIONS. These should be used as needed in order to fit the circumstances.

First, do not throw away the IRS letter. That may be your first impulse. We know that receiving such letters can disturb your entire day. We know some tax filers may hope that if they get rid of the letter, this matter will go away. Also some think that if they get rid of the letter, then they can later tell a “white lie” that they never received the letter and that will help resolve the problem. But no, none of this will work. IRS has huge computers and files that keep track of everything. Furthermore, who really believes that the Post Office routinely loses letters?

Second, get together all relevant tax returns. If it is the 2013 return that is involved, then Mr. Nguyen needs to have a copy of the return he filed. We always advise tax payers to keep a copy of all returns they file. We usually advise them to keep these for seven years at a minimum. If a tax filer does not have a copy of the relevant return, he/she can request a copy from IRS. Because of identity theft concerns, this may take some effort to get that copy. Taxpayers can always consult with the Taxpayer Advocacy Service and see how the return can be gained. (TAS has offices in many cities and its address can be found on line or in the Telephone book under US Government Offices.)

Third, go back to the one who actually prepared and filed the return. See what they say and what they advise. Sometimes, the paid preparers have closed their offices and no help can be gained that way. But if they are still open, challenge them with the IRS letter. Also try to find the very person who filled out the return at the paid preparer office. It is good to get that person’s name when you first consulted with them and write it on the copy of your return which the preparer is required to provide you.

Fourth, if the paid tax prepare is no longer available or does not seem able to resolve the problem, a taxpayer can always consult with our LITC office (Friendship Foundation LITC, 5400 Detroit Avenue, Cleveland, Ohio 44102 or at our telephone number 216-273-7323. We do receive and accept telephone calls and communications from all over the United States,) We have trained tax experts who can read and understand the IRS letter, determine what is needed, and advise the tax filer.

Fifth, sometimes the problem can be a simple one. For example, the tax form filed may have used the wrong social security numbers or filled out a line on the form improperly. Many times these problems can be resolved just by a phone call to IRS. Often our LITC personnel will set up a three-way call with IRS and help the taxpayer who may have a language challenge get the problem resolved. We should stress that always IRS personnel are courteous, concerned, and helpful.

Sixth, suppose IRS is stating that more proof is needed for a tax return. For example, especially in cases where the EITC is being claimed, IRS may want proof about a given child and where they resided during the year. Sometimes two taxpayers are claiming the same child for EITC purposes. Here is where the taxpayer may have to gather various documents which can involve school records or medical records which usually contain information about a child’s actual residence.

Once the taxpayer gains these documents, he/she will have to submit them. We always advise the taxpayer to keep copies of everything they send IRS. Once these documents are submitted, the tax filer should be on the lookout to get back a response. This can take thirty days or longer. If the taxpayer fails to hear anything within sixty days, the taxpayer should consult with IRS on what is happening and whether the documents were actually received by IRS.

Seventh, suppose that the tax matter cannot be resolved either by a telephone conference call or by submitting documents. Now the taxpayer will probably need some kind of legal representation. Sometimes the Taxpayer Advocacy Service may be able to help. If this does not work, then the tax payer may have to get outside legal assistance. The first place to turn to are the LITC’s or Low Income Tax Clinics that handle IRS matters and tax controversies. These LITC’s, which are partly funded by IRS, have attorneys who can represent eligible tax payers without any charges.

Eighth, tax payers are also free to hire attorneys to help them. These can be obtained through referrals from local Bar Associations. We usually advise people not to rely upon the television ads and newspaper ads they may see that promise a lot but may be traps and scams for unwary taxpayers. Or if they do consult these, taxpayers should be very careful and ask questions such as what services will they gain and how much will these cost. Get all of this in writing at the beginning of the services.

Ninth, throughout all of this, taxpayers no matter what their income are always free to consult with our LITC. As we stated before, we do have tax experts and probono attorneys who at least without charge can explain to a tax payer what is happening and assess legal services the taxpayers may be obtaining.

Tenth, taxpayers do have rights in these proceedings. That includes not only the right to consult legal help, but to appeal their cases into the Federal Tax Court and even higher into the general Federal Courts. They also have opportunities to work out compromises with IRS and even payment plans, if the final decision is against the tax filer.

Here is our final advice. It may be hard when you are involved in this process, but we advise people to trust in the system, have faith in their situation, and always to follow what the law provides. A little prayer also can be helpful.