Mistake 1: Responding by Phone When You Should Respond in Writing
Many IRS letters include a phone number and suggest you call. For simple questions, a phone call is fine. But for anything involving a dispute, a deadline, or a legal right, you should respond in writing. Written responses create a paper trail. Phone calls do not, at least not one that you control.
Mistake 2: Sending Documents Without the Letter
When the IRS requests documents, always include a copy of the letter or notice with your response. The IRS processes millions of pieces of mail. Without the letter attached, your documents may end up in the wrong place or take weeks longer to be associated with your account.
Mistake 3: Agreeing Without Understanding
When you receive a CP2000 or an audit letter proposing changes, do not agree and pay just because the IRS says you owe. The IRS works with the information it has, and that information is not always complete. You may have deductions, credits, or explanations that the IRS does not know about. Review every proposed change against your actual records before agreeing to anything.
Mistake 4: Sending Partial Responses
If the IRS asks for three documents, send all three. If they ask for information about multiple tax years, address every year. Partial responses result in partial resolutions, and the IRS will send another letter asking for whatever you left out. This extends the process and gives the IRS more time to assess additional penalties and interest.
Mistake 5: Missing the Deadline
This one is self-explanatory but it happens constantly. People receive a letter, put it aside to deal with later, and miss the deadline. Some deadlines can be extended with a phone call. Others cannot. The 90-day deadline on a statutory notice of deficiency and the 30-day deadline on a CDP notice are absolute. Once they pass, they are gone forever.
Mistake 6: Calling the IRS Without Preparation
Before calling the IRS, know your Social Security number, the tax year in question, the letter number, and what outcome you want. Have your return, supporting documents, and any prior IRS correspondence in front of you. IRS hold times are long. When you finally get through, you want to resolve the issue in one call, not be told to call back with more information.
Mistake 7: Not Keeping Copies
Every response you send to the IRS should be copied. Every letter you receive should be saved. If you mail a response, use certified mail with return receipt requested. If you fax, keep the confirmation page. The IRS loses mail. They claim not to have received things that were sent. Your proof of delivery is your protection.
The IRS is a bureaucracy. It operates on paper, deadlines, and documentation. Beat it at its own game by being more organized than it is.