When you receive an IRS notice keep the following suggestions in mind:
Do not Panic. A simple response to the letter usually is all that is needed. And remember, we are just a phone call away.
Read the letter. Do not ignore the letter. Letters will reference a specific year, a specific issue and give you specific instructions and dates by which to respond.
Respond, if requested, in a timely matter. Most notices you receive are requesting a change to your account, taxes owed or a payment request. Responding in a timely manner by the date specified could minimize additional interest and penalties.
Oops, it happens we all get busy and December 31st sneaks up on us and we missed taking our Required Minimum Distribution. Just like most mistakes…..you can ask for forgiveness to avoid the penalty worth 50% of the shortfall. Here are a few things to keep in mind if you realized you’ve missed the deadline:
Take the money out immediately
To get relief: File for 5329 and a attach a letter of explanation. Your letter should state that your mistake was of a reasonable error and explain the steps you have taken to remedy it.
Many times, they will forgive the first offense, but make a habit out of it and you will move to the naughty list.