Can the IRS send You a Notice if You have a Refund Due?

By
Education & Training with Tax Raj Solutions LLC

I represent taxpayers in Boulder, CO and Denver, CO Metropolitan, CO who have issues with unpaid taxes  and outstanding tax liabilities, back taxes and wage garnishments.

 

Short answer to this question is “Yes”. It probably is not a scam. The IRS sends notices/letters for many reasons. For example: according to the IRS update on November 4, 2021, the IRS sent a refund of $510 millions to 430,000 taxpayers who filed their 2020 tax return early in 2021, and had unemployment compensation. Later the unemployment compensation of $10,200 was excluded from federal tax return

(https://www.irs.gov/newsroom/irs-issues-another-430000-refunds-for-adjustments-related-to-unemployment-compensation)

 

Few reasons the IRS will send you notices are:

 

  1. To request that you file your unfiled tax return. They have third party documents showing that your income is more than standard deduction, thus you have taxable income.
  2. There may be mistakes on your tax return in calculation and you might get a notice saying that there is a math error on your tax return.
  3. You may have forgotten to include some income that the IRS has received from third parties.
  4. The cycle of taxes is: a) Filing taxes, b) Tax assessment, c) Tax collection, and enforcement of collection if taxes are not paid.
  5. Once the taxes are assessed and not paid with the tax return, the IRS has 10 year to collect it from you after which they are wiped out. This is the part where the collection activities start. 
  6. Contrary to the IRS having 10 years to collect money, if the taxpayer has a refund due, and they do not file the tax return, they can get their refund from the IRS by filing their return within 3 years. After that the IRS will gladly keep that money.
  7. If you do not file your return and the IRS has repeatedly requested you to do so, they will file a substitute return (SFR) for you and send you notice of assessed taxes.
  8. Majority of the time the SRF are not good for taxpayers because they only consider standard deduction and in real life you may have other deductions.

 


Steps to take if you receive a notice

 

  1. Open the notice, it is obvious that unless you open it you do not know what is in the envelope. I said this because people have come to me with a bag full of unopened letters.
  2. Identify what kind of notice you receive. Notice may vary from providing you the information to urgency as if  the sky is about to fall. The majority of time, on the upper right corner it will have a notice number.
  3. If you have not filed your tax returns, time to file is now. 
  4. If you are not sure what the notice is about and need help, give me a call.
  5. If you need help filing your past due tax return and would like to explore your options, call for consultation. If you are afraid that you owe money, we can work on that, after you have filed your due tax returns. The taxpayer need to have all required tax returns filed before any payment arrangements can be made with the IRS

 

If you or someone you know has additional questions regarding filing past due taxes, tax tax payments, levies and Liens business expenses tracking or other tax related matters, give me a call or send me a message. 

 

Many tax preparers and accounting professionals are extremely busy due to the complexity of tax regulations brought about by the COVID-19 pandemic and the IRS collection efforts to contact taxpayers with unfiled tax returns.


If you or somebody else you know are having IRS issues please feel free to contact me at raj@taxrajsolutions.com or call me 301-461-2022. The IRS doesn't like to be ignored. Be proactive.

Enrolled agents are federal tax practitioners licensed by the Treasury Department.

Comments (2)

Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Hello Rajbir and thanks for the great information to share with us here in the Rain.   I had a friend that got a interest payment check in the mail since his refund was not there yet.  Make it a great day!

Nov 07, 2021 08:04 AM
Rajbir Athwal
Tax Raj Solutions LLC - Boulder, CO
Your IRS Tax Representative

Good to hear from you. Beside interest, lot of notices associated with stimulus money adjustments, adjustments due to unemployement. Next way may be taxpaers whose income got adjust and impect some other credits and deduction.

Nov 07, 2021 08:09 AM