Undoubtedly, you are aware of Dear John letters. Often a young lady sent them
to men in the military, often containing bad news. Well, the IRS sends them to
taxpayers as well.
Dear John Letters From The IRS
The Internal Revenue Service sends out millions of Dear John letters to
taxpayers every year. Instead of informing you of a break up, these letters let
you know the IRS would like to get a bit closer. Before you bang your head on
the wall, you should understand these letters are typically not the sign of
impending doom.
Dear John letters from the IRS are technically known as correspondence
audits. Instead of showing up on your doorstep, the IRS simply sends a letter
regarding some aspect of your taxes. The letter may inform you the IRS believes
you owe extra money because of some issue.
Surprising, the IRS may also send you a notice that it believes you overpaid
some aspect of business taxes. Unfortunately, it does not do this for personal
returns. The letter may also contain a request for an explanation of some aspect
of your return or documentation supporting the same.
Regardless, you need to understand the IRS sends so many of these out that
there really is no reason to panic.
Importantly, the IRS almost always asks you to take very simple steps in the
letter. You are almost always asked to agree or disagree with whatever they are
requesting. If you agree, you rarely have to actually do anything other than
perhaps cut a check.
If you disagree, you need to write a letter explaining why and then wait a
few months for the IRS to get back to you. If the IRS does not agree with your
explanation, a larger audit proceeding may be undertaken.
Dear John letters from the IRS almost always cover simple matters. Make sure
to keep copies of all correspondence, so you have a record of how things went
down. The IRS often loses such things, so it can keep you out of trouble down
the road if the IRS sends a second letter on the same issue.
