If you have found yourself in the unfortunate position of going around and around with the Internal Revenue Service, you know how dizzying and frustrating it can be, especially when you know that you’re right and they are making a mistake. However, this seldom stops the IRS from declaring themselves the winner and sending you the dreaded IRD penalty letter. This is essentially the IRS telling you that you are responsible for paying more on your taxes or giving back part of your refund, but just because the IRS has declared victory doesn’t mean that you have to give in. You can send a letter back to the IRS known as a response to an IRS penalty letter that once again goes over your position, provides proof of the points you are making and is basically a last ditch appeal before the IRS decision becomes final. Let’s take a look at how this works.
Start the letter just like you would any formal letter. Put the address of the IRS bureau that you’ve been dealing with at the top and then your address underneath. Use a formal greeting and then state your situation and the fact that you are responding to the letter you received. You’ve likely been assigned an account number, or it could simply be your social security number, so make sure you use that number throughout. Once you’ve stated your situation and you express an interest in protesting the bureau’s findings, state your points one by one. If you can attach proof for each point, refer to each attached document or documents by name. Make sure that you name, social security number and account number are on every single document you attach.
It is important to stay positive with your letter, even if this is the 20th time you’ve had to write the IRS. They likely know that you’re frustrated so getting angry isn’t going to accomplish anything. In the same vein, don’t try t be overly nice with your letter, that’s equally as inappropriate.
Hopefully, you’ve not attached any original documents at any point during the process that has gone on so far. If you haven’t, than continue to make photocopies of documents that you feel back up your point and attach them. It can be a bit frustrating paying the postage, especially if you are sending in dozens of documents to back up your point, but the more proof you send, the better.
A final tip, keep a record of all of your correspondence with the IRS. If you should ever be scheduled for an in-person hearing on your situation, it is a smart idea to show everything that you’ve sent in and how you’ve responded to every letter sent. Consider it a show of good faith that can pay off later on down the road.
There is no question that dealing with the IRS can be frustrating, but perseverance pays off, so don’t give up.