Why Am I Receiving Tax Notices?
When you see an IRS envelope, you may immediately wonder why you are receiving tax notices. IRS notices are also informationally dense and confusing to people unfamiliar with them, making it difficult to immediately determine what's required to respond. Instead of trying to read through the notice and solve it the second you see it, or even worse, putting it aside as a problem for later, it's critical to have a system for receiving and handling tax notices.
In this quick guide, we walk through:
- Insight into why you are receiving tax notices
- How to optimize your tax notice intake process so you know the answer and the proper response
- The role of automation software in building better tax notice processes
We'll also explain how NOTICENINJA, our comprehensive tax management software, can help streamline the notice management process by reducing the time and stress of inputting tax notice information.
Many Notices Are Informational
For many organizations wondering why they've received a tax notice in the mail, there's often not a problem to worry about. Many tax notices are informational, including notices about changes in processes, status, or other updates. You may also receive notices with a new deadline, upcoming changes in reporting requirements, or regional alerts.
Informational notices rarely require a direct response and don't have a deadline. However, it is essential to file the notices quickly and ensure the proper personnel see them so they can use the information later. Having processes for sending the information (especially digitally) to tax professionals and internal financial employees is highly beneficial.
Some Notices Require Information Changes
When tax notices aren't purely informational, they often request information. For example, you may receive tax notices for your organization about:
- Discrepancies in tax filing requests
- Request for new contact information or entity details
- Informational requests for the next step in an audit
While these notices don't explicitly include fees and penalties, they require prompt action. The appropriate contact in your organization must provide the requested information as quickly as possible. Typically, the information is due within 30 days of the notice date. Missing this deadline can result in a more severe audit or increased penalties and fees. To enable fast response, having automated processes that digitalize notices can speed up the process and eliminate the risk of notices slipping through the cracks.
Maintain Organization to Respond Quickly
Regardless of why your company receives tax notices, your organization needs the right tools and resources to respond correctly to the notice. Manual processes take time, as your tax professionals must type and double-check that the proper information has been logged. Notices can also quickly get lost or fall out of sight within a stack of other notices, leading to late responses or a failure to respond by the time the company logs them. Many companies rely on traditional tools such as physical mailboxes or Excel-based spreadsheets, which can be helpful in the early stages but have pitfalls when handling a large volume of notices. These methods have further pitfalls, such as managing access to relevant personnel, lack of reminders, and an inability to track the notice and subsequent responses.
Managing notices with automation software empowers organizations to provide accurate information in the proper timeframes. Companies can create more reliable processes by developing organizational procedures using robust and interactive software. Look for software solutions that offer:
- Roles-based access and permissions
- Automated reminders for taking the next step in responding to or synthesizing tax notices
- Digitalizing tools to create virtual OCR scans of tax notices
- Tracking the in-depth history of views and responses to each notice
- Reports about average response times and other trends
Without software offering these tools, companies may have a lag time of up to 90 days and incur consequences for late action. But with more supportive technology, businesses can readily and confidently respond to any received notices.
Respond Quickly to Tax Notices You Receive with NOTICENINJA
Automation software is valuable for all business processes – especially those with tax notices requiring accurate responses within firm timelines. With NOTICENINJA, we provide a customizable software solution for managing tax notices, organizing the information, and responding to every tax notice within the deadline. Learn more today about how NOTICENINJA can optimize your business's organization.