IRS Computer Notices

If you have IRS problems, you might be afraid your mailbox. Will I get a notice from the IRS today? Was an error found in my tax return by an IRS computer audit? Do I need to pay the IRS more money?

Because the IRS doesn't have the manpower to perform face-to-face audits with every taxpayer, it uses its computer system to check tax returns and send out notices. If an error was uncovered on your tax return, you'll receive a notice informing you of it and you may be required to pay more taxes or given a refund, which is very unlikely. Interest and penalties will be on the balance due. The information the IRS computers use is from its own files and from other sources.

This example is just one of approximately 300 kinds of IRS computer notices generated. These are the most common notices:

• Claims you did not report all of your income: The IRS computer determines if you've reported all of your income by searching its files and comparing your information.
  
• Claims you made a math or clerical error: The IRS computer analyzes your return to check the math and clerical responses.
  
• Claims you failed to file your return: The IRS computer can see if a return was filed as needed.
  

If you receive any of the 300 computer-generated notices and you do not agree with it, do not hesitate to challenge the IRS and ask that it be corrected. File copies of all IRS correspondence in your records.

If the notice is right and you do owe the IRS money and don't settle in a month, you will start receiving a series of computer-generated bills known as the "500 series". The "500 series" will include a reminder that you have a tax debt (CP-501), your speedy action is required (CP-503), and a levy will be issued if you don't reply as soon as possible (CP-504).