Expat Tax Advice: If You Received A Letter From The IRS, Here’s What You Should Do

The IRS sends millions of notices to taxpayers every year. Reasons for sending these letters vary. The following list contains ten simple steps you should take when this notice arrives.

1. It shouldn’t be ignored. The IRS mostly sends letters and notices in connection with federal tax returns. The letter or notice will tell you why the contact has been made and give you instructions on how to respond.

2. Don’t panic! It is usually sufficient to respond to the notice in a simple manner.

3. Read the entire document carefully and completely. IRS letters usually contain specific instructions and information about what you need to do to resolve a particular question or problem.

4. Make sure you have filed your taxes. The purpose of these letters is typically to inform the taxpayer of a change or correction to their tax return. Compare the information in the letter with the tax return.

5. Don’t reply unless it’s absolutely necessary. This type of notice is usually informational and does not need a response. If you have to respond, you will be told exactly what to do in the notice. Do not reply unless the notice asks you to or if payment is required.

6. In the event that you need to respond, do so immediately. Despite your disagreement, you should reply. Write a response letter that explains why you disagree, and send it to the address listed in the notice. If the IRS needs more information or copies of documents to consider your position, make sure to include it. You will then need to wait a minimum of 30 days to receive an IRS response.

A date on the notice usually indicates one of three things:

– To preserve the right of appeal for the taxpayer;

– To ensure that the tax return is processed in a timely manner;

– Minimise penalties and interest;

7. Call only when necessary. The IRS usually does not need to be contacted in most cases. Before you call, ensure that you have the relevant tax return and notice at hand.

8. Your IRS letter may have arrived late. Whenever you receive a notice with a due date and the due date has passed or is too close, you should contact the IRS immediately to inform them of the late receipt and request an extension of time to respond. For overseas taxpayers with unreliable mail services, this is of particular importance. A one-month extension from the IRS is usually given right away, but you must contact the IRS to get one.

9. Please keep the notice. Make sure to keep a copy of all IRS notices and letters.

10. Need help from a professional? If you need professional tax assistance, notify the IRS that you have hired an accounting firm to assist you, and you would like time to allow your representatives to assess and respond on your behalf.

Xerxes Associates LLP work closely with US and UK expats from all different backgrounds, circumstances and occupations as well as high-net worth individuals in order to help them through the complexities of US and UK tax compliance requirements (tax imposed on expatriates). If you have a query or would like a friendly no obligation chat about your requirements then please get in touch and we shall be happy to assist you.

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