As a tax-paying citizen, you will be required to declare your earnings for the financial year and pay taxes on your income. In case of any discrepancies or errors in your returns, the Income Tax department may send you an audit notice so that they can correct it. The department also sends notices to taxpayers who have failed to respond to their earlier communications. Once you have registered for your ITIN, the next step is to track all communications from IRS. If you receive any letter from them, be sure to read through it and understand what they are asking of you before replying back with the required details. However, you needn’t worry if you don’t understand something or want to know more about a certain subject matter; this article will help shed light on the 5 different types of income tax notices that may be sent by the IRS and how best to respond accordingly.
Final Taxability Determination Notice This is the first letter that you may receive from the IRS. It will validate the details you have given in your tax returns and inform you whether you qualify for tax exemption or not. This is a notice sent by the Examination department of the IRS.
They will inform you if they have conducted a review of your tax return and they are ready to issue a Final Taxability Determination Notice. This notice will show whether the income you have reported on your tax return is taxable or not. If the income you reported is not taxable in any way, you will be issued a notice of Final Non-Determination.
However, if it is taxable in any way, the notice will specify the tax imposed on the income and any penalties that will be charged on it. In this case, you will be given an opportunity to file a petition asking for a reduction in taxes or an explanation as to why you reported it. If you fail to respond to this notice, they will issue a Final Taxability Determination Notice anyway. ## Summons to Appear for Interview If the IRS has found any discrepancies in your tax returns, they will send you a Summons to Appear for Interview. This is similar to a subpoena issued in a court case. There are two scenarios when you may receive this notice. The first is if the IRS has found a discrepancy in the information reported in your tax return and you have failed to respond to their inquiries so far. The second scenario is if the Examination department of the IRS suspects that you have underreported your taxes and have filed a false tax return. For example, if you have omitted income from your freelance work or have failed to report on income from side businesses like rental properties, interest income or an inheritance, the IRS may send you a Summons to Appear for Interview. In both these scenarios, you will be given a date and time to appear at an IRS office. It is a good idea to appear in person if there is a discrepancy or you want to explain certain things. In certain cases, they may let you appear through video conferencing or let you send your representative. It is always best to appear in person because it helps you avoid issues in the future and also shows that you are taking your tax obligations seriously. If you fail to respond to this notice, you will be fined $1000. ## Assessment and Acknowledgement of Receipt of Return Notice This is a standard notice sent by the IRS to inform you that they have completed their assessment of your tax returns. It will show the computation of your taxes and the details of credits or any over-payments that you have made. This notice is commonly sent to direct taxpayers who have filed a paper return and have not responded to the previous communications from the IRS. If you receive this notice, it is important to respond to it as soon as possible. However, you should ensure that you have received the notice in the first place. If you find the notice doesn’t have your name or your address, it may not be meant for you. It is always a good idea to keep a record of all correspondence, including the date and time when you receive or send a letter. If you fail to respond to this income tax demand notice, they will issue an Acknowledgement of Receipt of Return Notice. However, this will not be a final assessment notice. ## Tax Due Notice The Tax Due Notice is issued when the IRS finds that you have underreported your taxes or have failed to report certain credits. It will also contain the amount of taxes due as well as any penalties that will be imposed on it. This notice is issued by the Collection department of the IRS. If you receive this notice, it is important to respond to it immediately. You can respond by paying the taxes due or filing a petition. If you fail to respond to this notice, you will be issued a Tax Due Notice with an additional penalty. The amount of taxes due in the Tax Due Notice may be higher than the amount mentioned in the Tax Due Notice. This is because additional penalties will be included in the Tax Due Notice. ## Demand for Tax and imposition of fines A Demand for Tax is a notice from the IRS that shows that you have failed to respond to their communications and have failed to pay the taxes due. It will contain the amount of taxes due as well as any penalties that will be imposed on it. It will also contain the name of the officers who have sent the Demand for Tax. If you receive this notice, it is important to respond to it immediately. You can respond by paying the taxes due or filing a petition. If you fail to respond to this notice, you will be issued a Final Notice of Deficiency. A Final Notice of Deficiency is a notice that shows that you have failed to respond to the IRS’s communications and have failed to pay the taxes due. It is the last notice issued before taking a legal action against you. ## Conclusion The IRS sends tens of millions of notices every year. The organization also issues many types of notices. This article explains the different types of notices and provides tips on how to respond to them. These tips will help taxpayers avoid fines and penalties while dealing with the IRS.