According to CNBC, 80% of Americans have messed up their tax return before.
If you're part of that statistic, then you may get Internal Revenue Service (IRS) Certified Mail delivered to your mailbox.
Continue reading to find out what it means and what you need to do.
What is IRS Certified Mail?
The IRS only uses the United States Postal Service to send mail to citizens. However, mail can get lost which is problematic when it's an important and time-sensitive letter. Because of this, the IRS sends correspondence via Certified Mail.
Certified Mail is used to prioritize the letter and because of the tracking abilities. When Certified Mail is sent out it comes with electronic tracking. This allows the IRS to see if the letter is received or not. If it’s not signed for, they can identify where it was lost via USPS tracking.
Certified Mail also comes with a mailing receipt for the IRS. This receipt confirms that the letter was mailed. It also serves as delivery tracking to ensure that the letter makes it to the recipient.
Certified Mail can only be delivered with a signature. The postal carrier cannot leave the letter in the mailbox. They must have a signature in order to deliver the mail piece. The signature signals that the letter has been received, so there are no discrepancies.
While letters from the IRS are important, they generally only use Certified Mail to send correspondence that hasn’t reached you before. If you're receiving IRS Certified Mail, then that likely means they are expecting a response from you.
If you don't respond, then you could face serious penalties.
Reasons You May Receive a Letter
There are many reasons why you could get an IRS certified letter in the mail. Do not panic. Just work to figure out the reason for the letter and determine if you need to respond right away.
Auditing
One of the main reasons you get Certified Mail from the IRS is for an audit letter. When the IRS audits you, they'll assign an auditor to your case.
The auditor may use Certified Mail to send you an important letter about the audit. For example, they could be sending you an Income Tax Examination Changes letter.
This letter normally means that you'll owe the IRS more taxes.
Taxes Owed
If you don't pay your taxes at all, then the IRS will most definitely be sending you a letter. They will remind you of your tax liability and the amount you owe.
If they're just reminding you of your tax liability, don't worry right away. You'll have some time before you need to pay. However, be mindful of the grace period. If you ignore it for too long, then you'll have to pay financial penalties.
You should still try and address this letter as soon as possible. Contact your accountant immediately after receiving this letter, so that you can file your taxes. Working with a good accountant will help you swiftly file your taxes so that you'll still be in good standing with the IRS.
Verify Your Identity
While you would think the IRS has tabs on everyone, they may need further identity verification. They might have had an issue with your tax return and need to send you a certified letter to ask for additional confirmation of who you are.
They may be sending you a letter asking you to complete their identity verification process. If you receive this, you'll have to gather some documentation to prove that you are who you say you are.
You may need to do this even if you make a small mistake on your tax return. If you don't feel comfortable sending the information on your own, your accountant can send it for you.
Missing Information
Filing a tax return can be stressful and there are a lot of boxes to check and fill out. It's not uncommon for people to have missing information on their federal tax returns.
The IRS may send you Certified Mail to ask you for specific tax forms or other information to properly finalize your tax return.
The IRS already has a lot of information about you, but they may need to verify that information through records or documentation.
What to Do When You Receive a Letter
If you receive Certified Mail from the IRS you should not just throw it in the trash without ever reading it. Instead, read the letter and try to address it as soon as possible.
Make sure that you read the entire letter carefully. It can cause anxiety, but fully understanding the letter is important. Normally, the IRS will list what type of letter it is and why they're sending it.
You will also find instructions on how to proceed. While reading the letter, make sure that you take note of any instructions or deadlines that you need to be mindful of.
If you have any questions, you can reach out to your accountant or the IRS directly. They can assist with your outstanding tax benefits and this shows that you're not ignoring their communications.
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