Friday's Tax Quote - April 30, 2010

“People who complain about taxes can be divided into two classes: men and women.”
- Anonymous

Friday's Tax Quote - April 23, 2010

“We always get more of anything we tax less. So if you reduce the tax on sin, you’d probably get more sin.”

- John Snow

Friday's Tax Quote - April 16, 2010

“Substance controls over form, except where form controls over substance.” 

- Sheldon I. Banoff

Now that your return has been filed...what if you get a letter from the IRS?

The IRS recently issued one of their electronic "Tax Tips" emails.  I like this one in particular because it echoes something that I have said for quite some time.  If you get a notice from the IRS do not ignore it.  

One of the reasons that our tax system is successful (mostly) is because the IRS is, by design, scary.  This fear motivates us to file our returns and to do so correctly.  But for a great number of taxpayers this can also paralyze them when a notice arrives in their mailbox. To this the IRS has to say something that would make Douglas Adams proud: "Don't Panic!"  

Of course, the IRS makes it sound a little more simple than it really is to address a tax issue, but the main point is sound.  The envelope should be opened and the notice acted upon.  Failing to do so will only work to limit your options in what can be done.

Here is what the IRS has to say about receiving a notice:

"Don’t Panic! Eight Things to Know If You Receive an IRS Notice

The Internal Revenue Service sends millions of letters and notices to taxpayers every year. Here are eight things taxpayers should know about IRS notices – just in case one shows up in your mailbox.

1)  Don’t panic. Many of these letters can be dealt with simply and painlessly.

2)  There are a number of reasons why the IRS might send you a notice. Notices may request payment of taxes, notify you of changes to your account, or request additional information. The notice you receive normally covers a very specific issue about your account or tax return.

3)  Each letter and notice offers specific instructions on what you are asked to do to satisfy the inquiry.

4)  If you receive a correction notice, you should review the correspondence and compare it with the information on your return.

5)  If you agree with the correction to your account, then usually no reply is necessary unless a payment is due or the notice directs otherwise.

6)  If you do not agree with the correction the IRS made, it is important that you respond as requested. You should send a written explanation of why you disagree and include any documents and information you want the IRS to consider, along with the bottom tear-off portion of the notice. Mail the information to the IRS address shown in the upper left-hand corner of the notice. Allow at least 30 days for a response.

7)  Most correspondence can be handled without calling or visiting an IRS office. However, if you have questions, call the telephone number in the upper right-hand corner of the notice. Have a copy of your tax return and the correspondence available when you call to help us respond to your inquiry.

8)  It’s important that you keep copies of any correspondence with your records."

Friday's Tax Quote - April 9, 2010

“A lottery is a tax on people who are bad at math.”

- Anonymous

Friday's Tax Quote - April 2, 2010

“Our tax code is perhaps the second most remarkable book in Western Civilization. Of only one other book can it be said, with equal conviction, that the great minds have devoted countless hours to the scrutiny and learned exegesis of every passage; that differing interpretations of the text have given rise to some of humanity’s most epic struggles; and that, while millions mine it for valuable insights and inspiration, those who claim to live by the book and follow its precepts probably far outnumber those that actually do so.”

- J. Mark Iwry