What to Know About IRS Collection Notices

A common misconception about the IRS is that it’s this soul-less behemoth of a government agency that is out to get you with unrelenting phone calls and unexpected home visits. That visual is one for the big screen only. It’s not realistic!

Really, the IRS intends to work with you to make sure your taxes are paid in full, on-time, and without error. That’s why they have a fairly predictable way of doing things – this blog post intends to map that out.

An important note before getting too deep into IRS collection notices: the IRS sends notices by mail –  they will not initiate contact via email or social media. Any correspondence you receive via email, social media, or even over the phone should be ignored and/or reported as fraudulent. Most importantly, they will never ask for sensitive information like your PIN or account passwords through these channels.

Why the IRS Might Contact You

As with any correspondence from an office within the government, the IRS might reach out to you for any number of reasons. Typically, it’s related to a specific issue regarding your federal tax return or account, but it could also be about changes to your account or a request for payment.

The following are types of letters you might receive from the IRS:

Informational Notice

Sometimes the IRS might send you a notice if you’ve claimed certain tax credits, and they’re simply updating you for a related issue. Usually, you can simply take note of these letters without having to do anything.

Notice About Changes to Your Account

This is a pretty big bucket since it includes notices regarding your specific tax return—including the potential for an audit. You may receive an information notice if any of the following apply:

  • You’re due a larger or smaller refund. One of these is clearly more exciting than the other, but the IRS is direct when it comes to amending your refund and will let you know.
  • You filed an incorrect return. Something was missing from your return, or you/your accountant made a mistake when completing it, or something included in your return has led to a question (verify your identity, request additional information, etc.). The IRS will ask you to work with them to amend the return.
  • You didn’t report all of your income. Similar to the first bullet, you might have made a mistake when reporting your income, and the IRS wants to make sure everything is accounted for. Again, they’ll work with you to correct this mistake.

You’re being audited. Or perhaps you’ve already been audited, and now they’re providing additional information for your review. Read the letter to determine what the IRS recommends as your next step, then follow their instructions.

Payment Notice or Collection Letter

Simply put, this means the IRS recognizes a bill on your account, and they want you to pay it. This notice will come with pertinent details, including how much you owe, how to pay, and when it’s due. A collection letter from the IRS is often the most feared type of correspondence with this government agency, although it’s not the end of the world.

In the event that you’re unable to pay your balance in full, the IRS will provide options for you, including details on how to request an extension or enter an installment agreement. It’s important to pay attention to their instructions and respond promptly to prevent any penalties that might arise down the road. You can also avoid incurring a federal tax lien if you meet certain criteria.

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The key takeaway with any notice or collection letter from the IRS is to pay attention to the messaging and recommended next steps. Each notice will provide you with information on why you’re receiving it, if you need to reply, and how/where to submit your reply. Again, some information notices do not require a next step, so you can simply review the information and file the notice in your records.

You can read more about understanding your IRS notice here. On top of that, the IRS has published a wealth of resources on how, why, and when it may reach out to you. Here’s a handy list of facts regarding IRS letters and collection notices: Ten Things to Know about IRS Notices and Letters.

I want to talk to someone about my IRS collection notice.

If you want to get in touch with someone regarding your IRS collection notice, you can dial the contact number in the top right of your collection letter or notice. You may also reach out to the IRS in writing, but you will not receive a prompt response and should expect to wait about a month before hearing anything.

Your individual notice will probably direct you to hold onto the letter for your records, and that’s a good piece of advice. File it with the specific tax return to which it relates.

I lost my IRS collection notice and I don't remember what it said.

You may call one of the numbers listed below to figure out what your notice was about and what to do next.

  • Individual taxpayers may dial 800-829-1040 (TTY/TDD 1-800-829-4059)
  • Business taxpayers: 800-829-4933

Finally, don’t ignore any correspondence from the IRS. While it might not be the worst news (you owe more money or are being audited) or the best news (you’re getting a bigger tax refund than you thought), it will contain important information. Most importantly, do not ignore any collection letter that includes the words FINAL NOTICE on it—that could set you up for more heartache than you can stand.

If you have any additional questions regarding an official IRS correspondence like a collection letter or informational notice regarding your tax return, reach out to your tax specialist, or get in touch with an expert member of the Heartland Tax Solutions team. With decades of experience helping people make sense of their unique tax situations, you’ll be in good hands.