Open the envelope

Yes, the tax authority will write again if it is important; nonetheless, generally nothing good comes of waiting. (Beginning this year the Franchise Tax Board [FTB] will communicate primarily by email. Open those messages.)

Read the communication

Every page. In particular, IRS communications will alert you to time-sensitive procedural rights – on page two or three. Many deadlines are statutory with harsh consequences if missed.

Identify the taxpayer

Is the correspondence addressed to you personally or to your firm? Or you in your legal capacity as a principal of the firm? Tailor your response properly. The FTB can be casual about the legal boundaries separating a small entity and the individual who signs the entity’s return.

Respond Promptly

Respond promptly to straight-forward requests for documents or clarifying information. Not every communication requires your return preparer’s or tax attorney’s intervention.

Perplexed about what is being asked or announced?

Contact your return preparer or a tax controversy attorney to decode the message and provide a seriousness assessment. Another option: Call the telephone number provided and request clarification. Note that you are not required to provide your banking or other personal information if requested.

Confronted with a notice of (proposed) tax deficiency?

Do something if you don’t agree with the deficiency. Promptly. Call your CPA or tax controversy attorney.

Confronted with a final notice of intent to levy, including a right to a hearing if requested within a specified period (for the IRS, thirty (30) days)?

Do something. Promptly. No timely response means the funds in your bank accounts will be seized. Yes, the IRS can learn where you bank. The FTB levies funds quickly and often. Call your CPA or tax controversy attorney.

Remind yourself that a letter from a tax authority isn’t the worst thing

For criminal tax matters, IRS special agents turn up in person, in pairs, with guns. (Be polite, but tell the agents you will not answer questions before consulting an attorney. Skip your CPA and contact that tax controversy attorney.)

About the author:

Carolyn Lee, Abkin Law, practices civil and criminal tax controversy law exclusively.  Abkin Law is a judgment-free zone, accustomed to reviewing bundles of unopened mail the firm’s clients receives from tax authorities.