January 15, 2020
Did you get a letter from the IRS? 3 times to worry.
Getting a letter from the Internal Revenue Service (IRS) is likely to cause stress in even the most rule-abiding taxpayer. But when should a notification really be of concern? Three specific times a taxpayer should worry include:
- Intentional falsification of tax records. Did you inflate income or overestimate deductions? Maybe you receive a portion of income in cash and failed to report it or claimed an exemption that you do not have records to support. If you took any of these or other steps to intentionally thwart tax obligations, the IRS may consider moving forward with criminal charges. Depending on the details of the allegations, this could include prison time.
- Failure to report foreign assets. The IRS continues to crackdown on taxpayers who fail to report foreign assets. The IRS requires taxpayers to report any foreign financial asset that has an aggregate value of $50,000 or more on Form 8938 and attach this form to the taxpayer’s annual income tax return. Anyone with offshore accounts is wise to review current applicable law to better ensure compliance.
- This is not the first letter from the IRS. Do not ignore contact from the IRS. In many cases the correspondence is time sensitive. Ignoring the letter will not make the issue go away, but could lead to additional penalties.
These are just three situations that warrant increased concern. Taxpayers are wise to seek legal counsel if they receive notification from the IRS and have reason to be concerned the correspondence could result in serious financial penalties or allegations of criminal wrongdoing. An attorney can review the letter and discuss your options.