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I received an IRS letter or call. What now?

There are three reasons why the IRS might contact you:

You owe back taxes.

If the IRS thinks you owe back taxes, they’ll get in touch with you in order to collect them. Keep in mind that you might not owe as much as the IRS has calculated. But any amount that you do owe will be subject to some hefty penalties, as well as interest payments—it’s best to pay up as quickly as possible.

The IRS calculates penalties and interest based on the amount they think you owe. Penalties range from 0.5% to 5% per month for each month that you don’t pay your taxes or file your tax return, and they can go as high as 50% in a single year.

Interest, on the other hand, will keep accruing until you’ve paid your tax debt in full. Rates change quarterly (over the past several years, they have ranged between 5% and 8%), and they are compounded daily—which means that your interest payments will keep rising every day you haven’t paid your taxes.

The good news is that the sooner you pay off your back taxes, the less money you’ll ultimately have to spend. If you don’t think you’ll be able to pay, don’t panic. Get in touch with me for a free phone consultation, and we can go over your options together.

For more information about how to deal with your tax debt, see I owe back taxes.

You haven’t been filing your tax returns.

If you don’t file a tax return for more than a couple of years in a row, the IRS will file for you, and they’ll automatically assign you the least beneficial status. If you owe any taxes, they will come after you to collect. But even if you don’t owe taxes, it’s still a good idea to file. You may be missing out on valuable tax refunds, and unless you file your return within three years of the date that it was due, you’ll forfeit your refund.

Can’t deal with all that paperwork? Just give me a call or send me an email—I have over 20 years’ experience helping businesses and individuals prepare their tax returns, and I can make the process quick, easy, and painless.

For more information about how to deal with unfiled tax returns, see I owe past tax returns.

You’re being audited.

Every year, around 1.5% of all tax returns will be audited by the IRS. That may not sound like a lot, but recent technological advances have made it much easier for IRS computers to monitor your tax compliance. Nobody is safe from an audit.

It’s no secret that audits are scary. But you don’t have to face the IRS on your own. I can help you understand what to expect from an audit and guide you through the paperwork. In fact, I might just be able to help you get a good deal.

For more information about how to deal with an IRS audit, see I am being audited.