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When Should You Expect an IRS Notice?

June 29, 2016  |   Tax Advice   |   Tags: , , , ,  

While the sun may have set on tax season, you may have a nagging feeling that you overlooked something important when you filed your return. You may be inclined to dismiss this feeling, assuming that the IRS would have immediately notified you of any problem with your taxes. There’s a chance, though, that you’ll be informed of a tax issue long after you filed.

When You’re Notified

In some cases, the IRS will send out prompt notice of any underpayment of tax or concern regarding your tax return. Often, though, notices will be delayed by several months or even a more than a year. Identifying an issue with your taxes may require verification of third-party information (such as that reported by your employer), or your return may simply be on a long queue of those to be reviewed. Whatever the case, don’t be surprised to receive a tax bill long after the filing deadline.

Your Expanded Tax Bill

Any tax liability not paid by the original due date, such as April 15th, will begin accruing penalties and interest. This means that even if the debt is not assessed until eight months have passed since the deadline, you’ll still be billed the additional charges. It’s also worth noting that penalties and interest will continue to be added until your tax debt is paid in full.

Reasons Why You May Have a Tax Debt

Your now delinquent tax bill may have been caused by any number of mistakes. For instance, if you had a debt forgiven last year, this is a taxable event. In this scenario, you realized a personal gain because you obtained goods and services on credit; a portion of which you no longer have to pay back. If you fail to report and pay the correct amount of tax, the IRS will identify this discrepancy and notify you that payment is required. The assessment of any tax debt really comes down to an underpayment of tax; paying less in taxes than you should have, based on the income you received.

The Full Balance Due

Regardless of the original cause of your tax debt, the IRS will instruct you to pay the balance in full (including penalties and interest). While there are alternate resolution options available to you, it’s generally advisable to at least consider paying the entire tax debt up front. This will cut down on the total cost you eventually pay.

When to Contact a Tax Professional

When you receive an IRS notice requesting payment, it’s natural to be concerned. However, regardless of why you have a tax debt or how much you owe, there is a viable resolution to consider. Any time you’re faced with handling such a tax issue, it’s smart to first contact a licensed tax professional. He or she will carefully review all of the variables in your case and devise an effective solution.