What Happens If You Ignore an IRS Notice?

Receiving a notice from the IRS can be concerning, but ignoring it can make the situation more difficult. IRS notices are generally sent for a specific reason, such as an unpaid balance, missing information, a change to a tax return, or another issue requiring attention.

Understanding what the notice says and responding appropriately can help prevent a manageable tax issue from becoming a larger problem.

Why Does the IRS Send Notices?

The IRS sends notices and letters for many different reasons.

Common reasons include:

• An outstanding tax balance

• Changes or corrections to a tax return

• Missing tax returns

• Questions about reported income

• Requests for additional information

• Payment or credit issues

• Collection activity

• Identity verification

The notice should explain why the IRS is contacting you and whether any action is required.

What Happens If You Don't Respond?

The consequences depend on the type of notice.

In some cases, failing to respond may allow a proposed adjustment or collection process to move forward. If taxes remain unpaid, applicable penalties and interest may also continue to accumulate.

Ignoring repeated correspondence can reduce the amount of time available to dispute an issue or consider potential resolution options.

Can the IRS Begin Collection Action?

If you have an outstanding tax debt and don't address it, the IRS may eventually take additional collection steps.

Depending on the circumstances and required procedures, these can potentially include:

• Additional collection notices

• Federal tax liens

• Levies

• Wage garnishment

• Seizure of certain funds or assets

These actions generally involve specific procedures and notices, which is another reason IRS correspondence should not simply be discarded.

What If You Disagree With the Notice?

Receiving an IRS notice does not automatically mean the IRS's position is correct.

Compare the notice with your tax return and financial records. There may be missing information, an incorrectly reported payment, a discrepancy, or another issue that needs clarification.

If you disagree, the notice generally provides information about how and when to respond.

Pay Attention to Deadlines

One of the most important parts of any IRS notice is the response deadline.

Certain rights and options may depend on responding within a specified period.

Even if you cannot immediately resolve the entire issue, understanding the deadline and taking appropriate action can be important.

Keep Copies of Everything

Maintain an organized file containing the IRS notice and any related documents.

If you respond, keep copies of correspondence and supporting records. It can also be helpful to document when information was submitted and any communication you have with the IRS.

Good records can make future follow-up considerably easier.

What If You Can't Pay the Amount Owed?

Not being able to pay the full balance doesn't mean you should ignore the notice.

Depending on your circumstances, potential options may include an installment agreement, penalty relief, an offer in compromise, currently not collectible status, or another tax-resolution strategy.

The appropriate option depends on your tax balance and financial circumstances.

When Should You Contact a CPA?

Professional assistance can be useful when you don't understand the notice, disagree with an IRS adjustment, owe a significant balance, have multiple years of unresolved taxes, or are facing collection activity.

A CPA can review the correspondence and underlying tax records, explain what the notice means, and help determine an appropriate response.

Don't Let an IRS Notice Go Unanswered

An IRS notice doesn't necessarily mean you have a major tax problem, but it should be reviewed promptly.

James Ridout CPA provides IRS notice assistance, back-tax support, payment-plan guidance, penalty-abatement assistance, and tax resolution services for individuals and businesses.

Received an IRS notice and aren't sure what to do next? Schedule a consultation with our team to review your situation.