Understanding What the IRS Wants and Who to Send Your Notice To
Out of all the businesses in the United States, only 1% get audited each year. However, far more receive notices about filing requirements, penalties, and deadlines. While these notices don't often carry the same severity as an audit, failing to respond promptly can cost your business a lot of time and money.
But many new (and even many experienced) employees may get caught off-guard and wonder who to send IRS notices to. You can build out your business processes so that whenever your team receives a notice, it reaches the appropriate point of contact through the proper channels as quickly as possible. Follow these steps to get started.
How to Understand IRS Notices
At first glance, IRS notices look incredibly complex and technical. But there's a lot of information on the sheet, organized as efficiently as possible, to guide your way. Approach the task of how to interpret IRS notice documents systematically. First, identify the recipient and verify it is meant for your organization. The specific contact can even help give content. Next, identify the purpose behind the notice, such as balances due, changes, or requests for more information. Then, see which next steps the notice requires from your organization.
Scanning through the document to roughly identify these particulars can help you pierce through the unfamiliar formatting and anxiety of getting a notice. Next, complete the steps again with more care.
Read the Notice Carefully
Read through every line of the notice. While it can be overwhelming, focus on one section at a time before proceeding to the next. Because your first scan of the document gave you a bit of context, reading the form in its entirety should be easier.
Identify the Type of Notice
As you read through the document, take note of the type of notice and what department it's likely intended for. Some of the most common reasons why the IRS sends notices to a business are:
- There's a remaining balance due.
- There's a question about the provided tax information.
- There are changes to a payment plan or payment size.
This information will give you a lot of insight into who should be notified about the notice and which department ultimately needs to take action. For example, if you're a receptionist, office manager, or administrative assistant and receive a payroll tax notice requesting more information, you know the notice should go to the payroll department. Even if you don't know how to respond to the notice, you can route it to the right team or person. This helpful list of IRS notices can give you more information about each notice's details and its key stakeholders.
Determine the Reason for the Notice
If one of your job responsibilities is responding to the notice—or providing support for the final responder—identify the underlying reason for the notice. For example, a notice requesting more information about the last quarter's taxes may be due to insufficient information, or the information may have been provided incorrectly. Once you determine the reason for the notice, you can either take the following steps to resolve the issue or provide notes to dispute it.
Compare It to Your Tax Records
Comparing the notice to your tax records also provides context and can direct your next steps. You may compare it with a past notice to confirm your tax obligations are larger than previously calculated to your company's filing documentation and then believe the notice was sent in error. Alternatively, you might compare a notice about incorrect addresses to your tax documentation and confirm that the address was, in fact, wrong. This due diligence clarifies your next action items. It can also help support your case if the notice is incorrect.
For complex tax matters, consulting with a certified tax professional is essential. Make sure this option is easily accessible in your standard workflow for responding to notices.
Respond Quickly by Sending Notices to the Proper Person
Prepare for the possibility of receiving tax notices. Start by creating a living document of which roles and contacts within specific departments are responsible for different types of notices. Having a directory can ensure notices are speedily redirected and handled before their deadlines. In medium- and large-sized organizations, be sure to note the job title of the responsible party; this ensures notices don't get lost or delayed in the event of turnover.
Build an IRS Notice Organization System That Operates Smoothly Behind the Scenes
Knowing who you send IRS notices to in your organization and how to interpret IRS notice documents are fundamental parts of keeping your business compliant. Instead of handling each notice on a case-by-case basis, build a standard process everyone in your organization can follow.