How to Write a Letter of Explanation to the IRS (with samples)
If you have received a written notice from the IRS requesting an adjustment to a recent tax return, requesting additional documentation for your return, or if the IRS sends notice that your payment is late, you need to know how to respond appropriately. Keeping the lines of communication open is key to a successful resolution of nearly all tax issues. While putting your response in writing might sound like a daunting task, it is very likely to be the best and most effective way to respond to the IRS.
There are several key things to remember when writing your letter of explanation to the IRS:
1. Understand Why You Are Receiving the Notice
These notices or letters explain the reason for contact and give you instructions on how to handle the citation. If you have no reason to dispute the claim that has been made, then you won’t have to write a letter at all!
However, if response is required, learn more by using the notice or letter number provided and enter it on this page. Here you will be provided with more information and related FAQ. You will find this notice (CP) or letter (LTR) number either on the top or the bottom right-hand corner of your correspondence.
The IRS sends notices and letters for the following reasons:
- A due balance.
- A change in your refund amount.
- Questions regarding your tax return.
- To verify your identity.
- Additional information is required.
- A notification of processing delay.
2. Beware of Fake IRS Letters
Never trust a letter just because it says ‘IRS’. Many tax scammers will design a notice to exactly like it came from the IRS in order to steal your personal information. With a social security number they could even steal your identity. The IRS does not ask for personal information via email or social media, but even if you receive a letter, it is safer to get in touch for confirmation of its validity. Keep the letter or notice for future reference in case a second fake IRS letter is sent.
Here are some ways to tell if a notice from the IRS is fake news:
- It appears to be issued from an address in Austin, Texas.
- It is related to the Affordable Care Act and requests information regarding coverage from that year.
- It lists the LTR number in the payment voucher as ‘105C’.
- It requests a check made out to I.R.S. to be sent to the “Austin Processing Center” at a post office box.
- It is several pages long which is atypical of IRS notices and letters.
It is easy to be caught off guard if you receive sudden mail, email, or phone calls telling you the IRS is looking into your taxes, but never give out personal information without taking several steps to verify the validity of the claim. Little can be done once scammers have your information or money, so take extra precaution, as you will not be penalized for being responsible.
3. How to Complete a Letter of Explanation to the IRS
Once you are certain that you’ll need to respond to your notification from the IRS, here is best way to ensure you’ve taken the necessary steps and precaution to complete the process.
- Present your information in a straightforward and clear manner, addressing all questions raised by the IRS
- Respond quickly and adhere to any deadlines in the correspondence from the IRS. There are likely to be instructions to follow. Follow them carefully.
- Provide additional or supporting documents that are needed to support your perspective. For example, if the IRS has noted that you did not include income in your return for a small contract position and you simply forgot to include the 1099 on your tax return, include a copy with the letter
- If you think that the IRS letter is a mistake or contains erroneous information, outline your explanation clearly and concisely, with a tone of respect. It is in your absolute best interest not to inflame the situation.
- Include accurate contact information and personally sign your letter.
- Get help if you need it. It is wise to find reputable tax firms that can help you manage all communication with the IRS. With 30 years of experience in this area, Success Tax Relief has helped thousands of customers all over the country with complicated communication with the IRS.
We have included a sample template below that you can use in response to a potential error that the IRS has raised. Please note that you should insert as much unique information as possible into this template to communicate about your specific tax issue. This means if the issue raised by the IRS is not “failure to report income related to a small contract position,” you should rewrite this section to reflect what you’re being contacted about.
Also be aware that the address you insert under “Internal Revenue Service” should match the address on the correspondence you have received. Only include the field for “Tax Form” if a specific form was referenced in the correspondence you received.
If you’re not sure what to include in your response to the IRS, contact Success Tax Relief today and let us deal with the IRS!