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Opening the mail is rarely exciting, but receiving the dreaded IRS-certified mail can send even the calmest person into a frenzy. You may ask yourself why the IRS sent you a certified letter. People typically start mentally combing through their recent filing to determine what might be wrong. Others may head straight to the web to see if they might receive an IRS audit letter due to the certified letter received.
You might receive an IRS Certified Letter for several reasons, including an audit letter or an order to identify yourself before the IRS releases a tax refund.
What is IRS Certified Mail?
IRS relies on the U.S. Postal Service as its primary means of communication with millions of Americans. Unfortunately, the mail isn’t always received, and sometimes it’s not timely. If you do not respond to earlier, less threatening letters, the IRS will resort to sending certified letters.
All IRS-certified mail has the following characteristics:
- Mailing receipt: Certified mail is delivered directly to the intended recipient.
- Signature requirement: A certified letter requires a signature as proof of delivery and will be returned if not accepted by the intended recipient.
- Electronic delivery: IRS-certified mail uses electronic delivery tracking. The IRS can check the delivery information online or over the phone.
Note: IRS-certified mail requires a response within a reasonable time. Failure to respond could result in severe consequences.
8 Types of IRS Certified IRS Notices
The IRS might reach out to someone for many reasons, but the most common reasons are outstanding balances and requests for additional information. Below are the 8 valid reasons the IRS would send you certified mail;
1. IRS Believes You Have An Outstanding Balance
An unpaid tax balance is the most common reason for the IRS to send certified mail. The IRS sends a series of non-certified letters at the beginning of the collection process; these letters will become more threatening if ignored. Each balance due letter will include information on resolving the taxes, including options like an offer in compromise or an installment agreement.
Contacting the IRS immediately after receiving a certified letter regarding an outstanding balance is absolutely essential. Remember this outstanding balance will continue to accrue penalties and interest. If you continue to be ignored, it will result in a Notice of Federal Tax Lien, wage garnishment, bank levy, and other enforced collections.
2. Clarification Needed For A Refund Discrepancy
Not all IRS notices are bad news. Individuals and businesses can receive an IRS-certified mail if there is an issue with the return. This notice could indicate that you will receive a smaller or larger refund than anticipated.
Note: Reading through the entire notice. You may be required to take additional steps to ensure the refund is processed timely
3. Return Request for Information or Questions
Occasionally, the IRS will need additional information or have questions about your tax return. If the questions aren’t time-sensitive or critical to processing the return, the IRS will send the request for information by regular mail. If the question or information needed will delay the processing of the return, the IRS will send the request for information by certified mail. The IRS will typically be specific and include any forms required.
The most common return questions include clarification about the income sources, verification of the correct mailing address, and information about tax credits and deductions. Failure to respond in a timely manner will likely delay the refund.
4. Identity Verification
The IRS takes identity protection very seriously. The IRS will send a certified letter when they need to verify your identity. IRS will include instructions on completing the identity verification process. IRS will use forms of identification like the account numbers of a credit card or student loans to identify you.
The IRS uses other forms of identification information such as your mobile phone number, income tax return information, and filing status. Your response is time-sensitive and will delay your refund if not completed quickly.
5. Verification of Return Information Needed
Occasionally, the IRS needs information to complete the processing of your tax return. For example, you could be missing Form W-2 information or a mismatch of the employer information with that on file with the IRS. The IRS will include instructions for quickly returning the information, such as by portal online.
6. Return Amendments
While not a formal audit, the IRS occasionally indicates a needed change to a filed tax return. The IRS will send a CP 2000 Letter. This letter outlines the potentially required changes. The IRS will include instructions on how to agree or dispute the revisions. If arguing the revision, supporting documentation will be necessary.
Agreement or disputing the revision is very time-sensitive. If you fail to respond, the IRS will assume the revisions are correct and adjust the return. If the revisions result in a balance due, the IRS will send a Notice of Deficiency, to which you must respond or lose your rights to respond.
7. Processing Delays
Processing delays are another common reason the IRS sends certified letters. IRS does not send notices for general delays that impact everyone. They send certified letters to people expecting a tax refund with outstanding balances and could receive no or a reduced refund. IRS uses the CP44 notice, and unfortunately, the instructions for this notice are poor.
8. Audit Notification
In some cases, taxpayers may receive an IRS audit letter. If you receive this certified letter, it will include directions for returning supporting documents and updating other information. It will also have a deadline, so pay close attention to the dates.
Practical Tips for Handling IRS Certified Mail
It is common for people to put the letter aside without reading it, intending to deal with it later. This typically creates anxiety about the contents of the letter.
Instead of letting anxiety, follow these practical tips for dealing with IRS notices: read the ENTIRE letter carefully. Letters from the IRS will include the reason for the notice, detailed instructions on the next steps, deadlines for any response, and the most appropriate method of contact.
- First, scrutinize the letter to ensure it’s really from the IRS and not from a scammer:
- Note essential deadlines: If the IRS wants forms completed or supporting documentation by a specific date, the certified letter will have a deadline and instructions on providing the information.
- Establish contact to prevent collections: Individuals with outstanding tax balances should contact the IRS to avoid escalating the collection process.
- Hire a Certified Tax Resolution Specialist: Get help if you have taxes owed that are entirely unmanageable without professional help from certified tax experts.
The most crucial tip for handling IRS-certified mail is not to ignore it. Ignoring certified notices can lead to federal and state liens and the potential for wage garnishments.