How to Reduce Federal and State Tax Notices

Individual taxpayers are seeing record numbers of tax notices in recent years from the IRS in particular. The biggest complaint from Accountants and Tax Preparers these days is the number of tax notices they are responding to on behalf of taxpayers throughout the year. Preparers appear to be spending more time responding to tax notices then they are on the preparation of tax returns. A notice from a tax agency can be frightening and difficult to understand. The recommendation always is that you contact a trained Accountant or Tax Preparer immediately if you receive a tax notice from a Federal or State agency to respond on your behalf. However, below are a few tips that may help to reduce or eliminate the likelihood of a receiving a tax notice.

Estimated Tax Payments:

1. Make your estimated tax payments prior to the due date. Estimated tax payments for individuals for 2012 are/were due 4/17/12, 6/15/12, 9/17/12 and 1/15/13. .

Enroll in EFTPS:

1. EFTPS tracks your payments to the IRS for 18 months. The date you make your payment and the tax form and tax period it applies to are accessible online as evidence of your timely payment.
2. EFTPS allows you to make your IRS payments online, thereby reducing the possibility of your payment being lost in the mail or posted to the wrong account.

Respond to Notices Immediately:

1. Respond to all notices immediately. Interest and penalties continue to accrue, so contact the agency who has sent you the notice, or preferably, contact your Accountant or Tax Preparer to respond on your behalf right away.

Notify your Accountant, Tax Preparer and/or Employer:

1. Notify your Accountant, Tax Preparer and/or Employer if you experience any changes throughout the year. If you purchase a home, become unemployed, open an investment or retirement account, get married or any incur any other circumstance can affect your income and income tax liability for the year.

Use Professional Services:

1. Use a professional Accounting or Tax firm to prepare your individual tax returns. Accountants and trained Tax Preparers are required to continue their education annually and are informed of the newest changes in tax laws and reporting.

Establish Record Keeping Procedures:

1. Establish a secure place to keep all records for each tax year.
2. Send all checks and documents to Federal and State agencies via Certified Mail.
3. If you speak to a representative at any government agency, be sure to record the agents name and I.D. number for your records.

For assistance with any tax notices received from the IRS or the California Franchise Tax Board, please contact us at (866) 493-5400 to schedule a complimentary, initial consultation with one of our tax professionals.