IRS Certified Mail: Reasons Why You Receive These Letters
Opening the mail is rarely an exciting task but receiving the dreaded IRS certified mail can send even the calmest person into a frenzy. People start mentally combing through their financial transactions trying to figure out what might be wrong. Other people head straight to the web to see if they might be receiving an IRS audit letter.
In reality, though, the IRS sends certified letters for many reasons. That letter could be an audit letter, but it could also be a letter asking for identity verification before the IRS releases a tax refund. Review these common reasons for receiving IRS certified mail.
What is IRS Certified Mail?
The IRS relies on the U.S. Postal Service to deliver mail to millions of Americans. Unfortunately, the mail isn’t always delivered, and sometimes it’s particularly time-sensitive and important. If problems aren’t addressed, the IRS will resort to sending certified letters.
IRS certified mail has these specific characteristics:
- Mailing receipt: Certified mail comes with a mailing receipt for the sender, in this case, the IRS. This mailing receipt is the first step in a tracking system that ensures a delivery to the intended recipient.
- Signature requirement: A certified letter isn’t left in someone’s mailbox. It requires a signature as a record of delivery and will be returned if not accepted by the intended recipient.
- Electronic delivery: The final component of IRS certified mail is electronic delivery tracking. The sender can review the delivery information online or over the phone.
Certified letters are generally a last resort for the IRS. That means that, once someone starts receiving IRS certified mail, the IRS will be expecting a response within a reasonable amount of time. Failure to respond could result in serious consequences.
7 Valid Types of IRS Certified Mail and Notices
There are many reasons the IRS might reach out to someone, but the most common reasons are related to outstanding balances and requests for more information. However, there are a few valid reasons someone might receive IRS certified mail.
1. Outstanding Balance
An unpaid tax balance is one frequent reason the IRS sends certified mail. The IRS sends standard mail when the collection process begins, but the process will escalate if the notices are ignored. The demand letter will include information on how to resolve the debt with options like an offer in compromise or an installment agreement.
It’s important to contact the IRS immediately after receiving certified letters with a payment demand. This balance continues to accrue interest and penalties, and it will ultimately lead to a Notice of Federal Tax Lien, wage garnishment, bank levy, or some other type of forced collection actions.
2. Refund Discrepancy
Not all news from the IRS is bad news. Individuals and businesses that are expecting a tax refund can expect IRS certified mail if there is a discrepancy in the return. This discrepancy could be a smaller or larger refund than anticipated, though it’s important to compare any new refund amounts with the original tax return.
Even if a certified letter is informing someone of a refund discrepancy, it’s important to read through the entire notice for any pertinent information. There may be additional steps to take to ensure the refund is processed.
3. Return Questions
Occasionally the IRS has questions about a tax return. If the questions aren’t time-sensitive or critical to processing a return, the IRS will send the request for information through standard mail. However, more critical requests will be sent as certified letters. The IRS will typically include any forms that need to be filled out, as well.
Common questions about tax returns include clarification about sources of income, discrepancies in the mailing address on file, and verification of tax credits and deductions. Delays in answering these questions will delay the refund process.
4. Identity Verification
The IRS takes identity protection seriously and will send certified letters when they need to verify someone’s information. This letter will include instructions on how to complete the identity verification process, and it will require valid forms of identification like the account numbers from a credit card or student loans.
There are other requirements to verify identity as well, such as a mobile phone number, income tax returns, filing status, and either a 5071C, 5747C, or 5447C letter. This process is usually time-sensitive and could delay refunds if not completed quickly.
5. Information Needed
Sometimes the IRS needs more information to process a tax return. There could be missing Form W-2 information or a mismatch in the employer information the IRS has on file. If the information is critical, the IRS will include directions for returning the requested information easily. This might be over the phone or through an online portal.
In some cases, taxpayers might receive an IRS audit letter. This certified letter will include directions for returning supporting documents and updating any other information. It will have a deadline too, so pay close attention to the dates.
6. Return Amendments
While not a formal audit, the IRS does occasionally need to make changes to a filed tax return. In these cases, the IRS will send a CP2000 letter. This letter will outline the changes and include directions for agreeing to or disputing the revisions. Supporting documentation might be necessary for anyone that disagrees with the changes.
These changes to a tax return are generally time-sensitive but they don’t require an amended return. The changes are critical to processing the return, so any delay in responding to the notice could further delay a tax refund.
7. Processing Delays
Processing delays are another reason the IRS sends certified mail. While they don’t send notices for general delays that impact everyone, they do send certified letters to people that are expecting a tax refund but could potentially owe other federal taxes. This notice is called the CP44 notice and it, unfortunately, doesn’t come with instructions.
IRS certified mail for processing delays like this is a courtesy notification. Detailed information will follow once the IRS has determined whether the refund will be applied to a past-due tax balance or sent to the recipient.
Practical Tips for Handling IRS Certified Mail
It can be intimidating to receive IRS certified mail. It’s not uncommon for people to put the letter aside without reading it so they can deal with the problem later. This can lead to anxiety over the contents of the letter.
Instead of letting anxiety fester, follow these practical tips for dealing with IRS notices:
- Read the entire letter carefully: Letters from the IRS include the type of and reason for the notice, detailed instructions on the next steps, and the most appropriate method of contact.
- Make note of important deadlines: If the IRS wants forms completed or supporting documentation, the certified letter will have a deadline and instructions for returning the information.
- Establish contact to prevent collections: Individuals with outstanding tax balances should establish contact with the IRS to prevent collection activities like additional letters and phone calls.
- Hire a Certified Tax Resolution Specialist: Some people have tax debt that is almost unmanageable without professional help from certified tax experts.
The most important tip for handling IRS certified mail is simply not to ignore it. Ignoring certified notices can lead to federal and state liens as well as the potential for wage garnishments.
Find a Tax Debt Relief Solution
Outstanding tax debt can lead to significant financial consequences, such as the potential for levies and tax liens. Individuals and families that find themselves receiving IRS certified mail for their tax liabilities should consider professional options.
Tax debt relief solutions can help alleviate financial burdens that hold people back. A Tax Resolution Specialist has the skills and experience to negotiate the best settlement offers for any situation.