Did You Get an IRS Letter? Here's What to Do If They Request an Adjustment

Understanding IRS Adjustment Letters and How to Respond

Receiving a letter from the Internal Revenue Service (IRS) is rarely a pleasant experience, especially during the summer months when most people are looking forward to relaxation and travel. However, the arrival of an IRS adjustment letter can disrupt this time of year. These letters, which have been sent to thousands of taxpayers recently, indicate that the IRS has made changes to your federal tax return. It’s important to understand what these letters mean and what steps you should take to resolve any issues.

An IRS adjustment letter is an official notice that your tax return has been reviewed and modified. This can happen for several reasons, including arithmetic errors, discrepancies in reported income, miscalculated credits, or additional information provided by third parties such as employers or financial institutions. These letters typically come with specific codes like CP11, CP12, or CP13, and they may indicate one of three outcomes: you owe additional taxes, you will receive an adjusted refund, or your return was corrected without any financial impact.

The summer season tends to be a busy time for IRS adjustments for a number of reasons. By this point, many tax returns filed in April have been processed, and automated audits are completed. The IRS also compares forms like W-2s and 1099s against what taxpayers have reported. Additionally, automatic corrections related to credits, such as the Earned Income Tax Credit (EITC) or the Child Tax Credit, are applied. These activities often lead to an increase in adjustment letters being sent out during the summer months.

If you receive an IRS adjustment letter, the first step is to read it carefully. The letter will detail the type of adjustment made, the reason for it, and any actions required on your part. Key elements to look for include the notification number (e.g., CP12), the amount of change (if applicable), the justification for the adjustment, and the deadline for responding or appealing. Understanding these details is essential for determining your next steps.

Next, verify your original tax return. Compare what you reported with the modifications made by the IRS. If you have a copy of your return (Form 1040) and supporting documents like W-2s, 1099s, or 1098s, review them to identify any potential errors. This comparison will help you decide whether you agree with the IRS's adjustments or if you need to take further action.

If you agree with the adjustment, no further action is required unless specified. However, if you disagree, you have the right to appeal. You must respond within 60 days from the date of the letter. Your response should include a brief letter explaining your disagreement, copies (not originals) of supporting documents, and the stub from the original letter with your information. Send this by mail to the address provided in the letter, or by fax if applicable.

Should the IRS determine that you owe additional taxes, it is important to address this promptly. You can pay online through the official IRS website or request a payment plan if you are unable to pay the full amount immediately. Ignoring the letter can lead to accumulating interest or penalties, so timely action is crucial to avoid further complications.

Be cautious of scams during the summer, as fraudulent activities often increase. The IRS will never request payments via phone or email and only communicates through official letters. Ensure that any correspondence you receive has the official IRS seal and is well-written. If in doubt, contact the IRS directly at 1-800-829-1040 or check your account status on irs.gov to verify the legitimacy of the communication.