Navigating IRS Notices: A Comprehensive Guide for Businesses

by Paul Devlin


You’ve just received an IRS notice for your what?  APlus can help. Our on staff tax expert will guide you through the complexities of responding to an IRS notice and work with you to ensure you make a timely response that satisfies all IRS requirements. With APlus Payroll, you’ll never have to worry about navigating the often-confusing paperwork associated with responding to an IRS notice – let us take care of it for you as part of our service to you.

Receiving a notice from the IRS can be intimidating, but it’s important to understand that these notices are often routine and can be dealt with effectively if you follow the correct steps.

Who Should Respond to an IRS Notice?

Typically, the person or entity that should respond to an IRS notice is the one named on the notice. This could be the business owner, a partner, or a corporate officer. In many cases, businesses may also have a tax professional, such as your payroll provider (assuming they have a tax expert on staff), Certified Public Accountant (CPA) or tax attorney, handle IRS correspondence on their behalf.

Steps to Take Upon Receiving an IRS Notice

  1. Don’t Panic: Remember, not all IRS notices relate to audits or penalties. It might be a simple request for additional information or clarification.
  2. Read Carefully: Understand what the IRS is asking for. The notice will usually state why it was sent, what the IRS is requesting, and what you need to do to resolve the matter.
  3. Respond Timely: It’s crucial to respond within the timeframe specified in the notice to avoid additional penalties or interest.
  4. Provide Necessary Information: If the IRS is asking for specific documents or information, provide them promptly and accurately.
  5. Keep Records: Maintain a copy of the notice and any correspondence with the IRS for your records.

Potential Consequences of Ignoring an IRS Notice

Ignoring an IRS notice can have serious repercussions. The IRS may assess penalties and interest on any unpaid taxes, which can accumulate rapidly. In severe cases, the IRS can place a lien on your business assets or seize your property.

For example, a small business in California ignored several IRS notices regarding unpaid payroll taxes. As a result, the IRS assessed penalties and interest, eventually leading to a tax liability of over $100,000. This could have been avoided had the business responded promptly and worked out a payment plan with the IRS.

Practical Suggestions for Handling an IRS Notice

If your business receives an IRS notice:

  • Don’t ignore it. The issue won’t go away on its own and delaying can only make things worse.
  • Seek professional help. A tax professional can help you understand the notice and guide you on the best course of action. That’s why outsourcing your payroll in moments like this makes all the difference.
  • Consider setting up an installment agreement if you owe taxes and can’t pay the full amount immediately. The IRS often agrees to such arrangements to ensure they collect the owed taxes.
  • If you disagree with the notice, you have the right to appeal. Consult with a tax professional to understand your options.

Receiving an IRS notice is not the end of the world. With prompt attention and the right approach, it can be handled effectively, minimizing disruption to your business operations. That’s why APlus has a tax expert on staff, to help you move forward with certainty and peace of mind!

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