The IRS Has Calculated Your Tax for You: What Now?
Posted on 05. Feb, 2010 by Jo Hagan, CPA in Small Business Taxes
More and more, I’m hearing from people when they receive the dreaded notice from the IRS. Usually, they know it’s coming. It’s just a matter of time.
The notice goes something like this: we haven’t received your return for _______ (you fill in the year), therefore, we have calculated the amount of tax you owe. Please remit __________ (insert insane amount of money here) right away.
And then as you read further, you find that the IRS made some assumptions about how much money they think you made that year, calculated tax on that number, and then added a bunch of penalties and interest.
Sometimes I hear from people right away at that point. Other times, they wait until they receive CP501, CP502, CP503 or CP504. Those are the collection letters “reminding” you of your balance due. The last one is a “final notice” that lets you know the IRS is about to get serious. What follows next is an “Intent to Levy.”
What Do I Do?
Whether it’s denial, procrastination, or some other extenuating circumstance, you may have placed your bookkeeping or tax stuff on the back burner. And it can be absolutely frightening when those official-looking notices start showing up.
My advice?
Take action right away.You’re going to have to deal with the issue… or else the IRS will deal with it for you. And trust me: you don’t want that to happen.
But you don’t have to go it alone.
Choose an experienced tax professional who can help you address the situation. Many times just contacting the IRS can help. If they know you’re working on it, then they can slow the process down.
But I Have No Idea How Much I Owe
No problem. This is where you ask for help.
Even if you’re fully capable of catching up your bookkeeping, the situation can become so emotionally charged that what is normally a relatively straightforward, mundane task can feel like you’re carrying a 40-ton pile of bricks.
One area that I specialize in is helping people just like you get things caught up. Frequently, clients come to me with paperwork in disarray… bank statements, credit card statements, receipts… completely disorganized.
Guess what? It’s not emotional for me. I’ll help you sort through everything… figure out what’s missing, and help you get it straightened out. Contact me today.
Unfiled Tax Returns
The IRS has gotten more and more efficient in recent years at dealing with unfiled tax returns. The unprecedented amount of information they are collecting from multiple sources gives them data that they use to estimate your income for you.
They also have made significant investments in automation and have sped up the process of getting these notices out. This is why more and more people are getting these notices than ever before.
It used to take years sometimes before people would hear from the IRS. Not any more. They are moving faster and faster.
The sooner you deal with your situation, the less you will owe.
Don’t Fall for Scams
It seems like the internet is crawling with people who want to make your tax problem go away. They’ll offer to write to the IRS and protest the legal basis for requiring you to file a 1040. They’ll sell you downloadable forms to respond to the IRS and try to delay the process, etc.
Take it from me. As someone who has had to clean up after these messes, you don’t want to waste your money and time on these fraudulent maneuvers. When you find yourself in Federal Court, what was a big enough ordeal (emotionally) but still a relatively simple paperwork problem has now become a life-altering mess that puts undue pressure on your marriage, your business, your family, and your health.
Let us help you solve your problem.