Not Much Is Scarier Than Getting a Letter from the IRS. Here's Why You Might
If you try Direct File, you may receive an unexpected thank you letter from the IRS.
There's nothing more frightening than receiving a letter from the IRS -- especially if you're not waiting on one. That recently happened to me after I signed up to use IRS Direct File, the agency's new online tax filing software.
I've been filing my taxes on my own for five years and haven't ever received any correspondence from the IRS. So when I pulled the IRS letter out of my mailbox, I thought I was in big trouble. Did I make a mistake when I e-filed my taxes a month ago? I didn't even think to consider the letter was connected to my trying out Direct File.
Because I have USPS Informed Delivery, I knew the letter was coming. After panicking about the letter all day, I opened it to find out the IRS was just thanking me for trying its new tax service. While I was relieved, I was also surprised. Neither the IRS Direct File site nor main IRS site mention that a thank you notice will be sent to you for trying the first-year tax service. So let me save you a few minutes (or hours) of panic -- if you try Direct File, you may also receive a thank you letter.
Even if you haven't tried Direct File, the IRS could send you mail for a variety of reasons -- and they don't always mean you'll owe money or will be audited.
Why will the IRS contact me?
IRS letters can be anxiety inducing, especially if you've never gotten one before. But the truth is, the IRS sends out millions of notices to taxpayers each year -- about 170 million to be exact. They aren't always easy to understand, but the IRS is working on making them shorter and simpler for the common taxpayer to decipher.
Here are some common reasons why the IRS will contact you via mail:
- You have a balance due.
- You're due a larger or smaller refund.
- To ask a question about your tax return.
- To verify your identity.
- Because some additional information is required.
- To inform you the IRS changed your return.
- To notify you of delays in processing your return.
If you do receive a letter from the IRS that requires an action, be sure to respond by the due date. Doing so will preserve your right to appeal the decision and avoid additional penalties. And if you do owe the IRS money, it's important that you pay as much as you can or apply for an Online Payment Agreement or Offer in Compromise.
This year, the IRS is also gradually sending out collection notices that were paused during the pandemic. You could receive a collection notice if you have individual tax debt from before the 2022 tax year or if your business, tax exempt organization, trust or estate has unpaid taxes from before the 2023 tax year.
The IRS also announced in February that it will begin going after 125,000 high-income earners making over $400,000 per year who have not filed a tax return since 2017. These are all cases where the agency received third-party payment information, such as W-2s and 1099s, for high-earning nonfilers, according to the IRS.
Will the IRS text or call me?
Tax season is prime time for scammers looking to dupe taxpayers into sending them money. Scammers often try to reach you by calling your phone or emailing you, which is the first red flag to look out for. The IRS will typically only reach out to you via the mail,
In rare cases, the IRS may call you or visit your home or business if you have an overdue tax bill, an unfiled tax return or as part of an audit. But even then, the IRS will first mail you several letters via the United States Postal Service.
If the IRS does call you, it will never:
- Demand immediate payment through a specific method.
- Threaten to alert the local authorities.
- Insist taxes be paid without offering you the opportunity to appeal the amount owed.
- Randomly call about your tax refund.
If you receive a scam call, you can report the call and the number directly to the IRS.