For most people who do not work with the Internal Revenue Service (IRS) on a regular basis, when you receive a letter in the mail from the IRS, you may feel panicked. You might want to leave the letter unopened, or throw it away and never think about it again. However, ignoring the love note from the IRS is a bad idea. Ignoring this letter is the last thing that anyone should do.
If you get a letter from the IRS, step one is not to panic. On the surface, this may seem impossible. However, not all letters from the IRS contain bad news—in fact, there could be a nice refund in that envelope. If there is unpleasant news, address it immediately rather than letting it turn into something worse.
Here are four types of situations where the IRS sends a letter—and what you should consider doing if you receive one of these letters in the mail.
- You owe money. This is the first letter the IRS will send. Maybe you made a mistake on last year’s taxes and owed more than you thought. Perhaps you underwithheld in years past and now owe back taxes. Whatever the reason may be, the IRS wants money back and the way you approach this letter will likely be based on how much they are seeking. For instance, if they are looking for $800, it may make more sense to pay that money and not hire a lawyer to fight back. However, if the IRS is seeking $250,000, then securing counsel should probably be the first thing that you do. Whatever the case may be, you definitely do not want to ignore this letter, as it can lead to far greater consequences.
- The IRS files a lien. When you don’t pay what you owe, the IRS can take a lien and secure an interest in your property in order to get that payment. This lien can be imposed on real property or personal property. This lien can be assessed on your house or your bank account. When a letter notifying you of a lien comes through, it is critical to either pay what you owe or to make an arrangement with the IRS to pay back your tax debt. To assist you in this process, you need to get help.
- You receive a levy notice. If you do not pay back your debt after receiving notice of a lien, then the IRS can levy your property. This is the legal taking of your property in order to settle a tax debt, and it can happen in a number of different forms. The IRS may garnish your wages, take money out of your bank account, or even seize and sell your home or car. Upon receiving a notice of a levy, either contact the IRS to settle your debt or contact an attorney to help you navigate this matter.
- Your passport is being revoked. In certain situations for unpaid taxes, the IRS can prevent you from having your passport renewed or outright revoked. Upon receiving certification from the IRS, the State Department won’t issue you a new passport. If you receive this news, consult with an attorney or contact the IRS as soon as possible to resolve this matter.
Ultimately, receiving a letter from the IRS can be daunting. If you ignore it, there will be more harm than good. If you have received a letter from the IRS, consider consulting with an experienced tax attorney who can help guide you through your specific situation. Contact Brinen & Associates to schedule a consultation.