What Happens if You Don’t Respond to an IRS Notice?
You grab the mail at the end of your day and a letter from the Internal Revenue Service (IRS) waits for you. Do you open it and respond? For many Americans, the temptation to ignore an IRS notice is real. If you know that you owe back taxes and worry that you don’t have the money to pay your bill, the appearance of an IRS notice can be overwhelming.
But what happens if you simply ignore the notice—pretend that you never saw it or that it failed to arrive? Many Americans ask themselves the same question. An estimated ten million U.S. citizens owe money in back taxes to the IRS.
If you receive an IRS notice, you have likely already been singled out as a taxpayer who owes them money. Ignoring the notice will only allow the IRS to escalate its approach. Before we look at what happens if you ignore an IRS notice, let’s first look at why more and more Americans will be facing this problem.
The Odds Have Changed
While some would argue that getting in trouble with the IRS has always been easy, recent changes have given the organization an even greater reach. With increased government funding to the IRS, there will be greater enforcement than ever before.
The Inflation Reduction Act, which passed into law in August of 2022, increased IRS funding by almost $80 billion over the next ten years. While the agency has said it plans to use the funding to improve technology and customer service, over $45 billion has been earmarked for tax enforcement, including hiring more staff.
In other words, if you receive an IRS notice, it is important—perhaps more than ever before—to pay attention and respond. While ignoring letters or phone calls may be tempting, especially if you know you don’t have the money to pay your back taxes, the strategy only offers short-term relief. Once the IRS has you in their sights, it will persist until it retrieves the money it says you owe.
Not All Notices Indicate an Audit
Although it’s easy to assume the worst if you receive an IRS notice, you are not automatically the subject of an audit. In fact, IRS notices can be sent for a wide range of reasons.
Often, they reach out for information missing on your return. You may have left details out by mistake, for example, or you may have entered information that doesn’t match what the IRS has on record for you.
Sometimes, the IRS will need you to provide proof of details on your return. In this case, you may need to provide receipts or other documentation to complete your return.
The IRS will give you a deadline to submit this information or documentation. You often have 30 days until the IRS assumes that you have ignored the notice. If you can, collect and submit the information the IRS has requested, before the suggested deadline.
Let’s take a closer look at the events triggered if you fail to respond to an IRS notice.
Risks of Ignoring an IRS Notice
If you fail to respond to the IRS, they will assume that you have ignored their request. At this point, they can take one of many steps, including:
- Issue another warning or notice
- Issue a 90-day letter — a notice of deficiency that can include proposed taxes and/or penalties
- Make changes to your return themselves, which risks them removing or reducing credits or deductions
- Initiate a field or office audit, through which an IRS agent will look more deeply into your income and reported taxes
If you disagree with a notice of deficiency, you will have 90 days to file a petition with the U.S. Tax Court. If you choose to do nothing, you could put yourself at even greater risk.
In essence, no matter how the IRS is reaching out to you, it is important to respond. They have a number of ways they can nudge you to act. In more extreme cases, they can force you to cooperate.
The IRS Toolkit
Of course, when it comes to your tax compliance, there are several ways for the IRS to get your attention. If you don’t respond to notices or phone calls it can escalate efforts quickly.
Among the other tactics available to the IRS are:
- Substitute return — If you fail to respond to a 2566 notice from the IRS, telling you they haven’t received your tax return, the IRS can file a Substitute for Return (SFR) on your behalf.
- Asset seizure — If you fail to respond to IRS notices, it may eventually resort to freezing your bank accounts or placing liens against your property.
- Passport denial — With guidance from the IRS that you are seriously delinquent on taxes, the State Department can deny renewal or even revoke your passport.
As you can see, the IRS has the power to make your life difficult. With a powerful toolkit to force taxpayers to comply, it is in your best interest to get ahead of any issues. Rather than ignore IRS notices, it is important to read them carefully and respond promptly. Many notices provide a limited time to respond before they indicate an escalation to more serious tactics.
But what if your back taxes have been accumulating for a number of years and you can’t pay the amount they say you owe? What if you disagree with their assessment altogether? That’s when it is critical to find the right partner and ensure that you have an experienced team on your side.
Find the Right Support
The IRS is interested in collecting your money and closing your case quickly. If you hesitate or take time to think about the IRS notices you receive, you could be wasting valuable time and putting yourself at greater risk for an escalation of their tactics. Rather than looking the other way when you receive an IRS notice, look for the right kind of support.
An experienced tax team understands every nuance of an IRS notice. They know exactly what the IRS is requesting, how long you have to respond and what your rights are, as a taxpayer. To minimize your anxiety around any IRS notices you have received, and the amount you may ultimately need to pay, look for a trusted team of tax professionals to work with you. These experts will not only be up to date on current tax laws but will also understand the best ways to communicate with the IRS.
At Franskoviak Tax Solutions, we have helped thousands of clients with tax planning for more than 30 years. We provide comprehensive tax services with first-class expertise and a personalized, boutique-style approach. Speak to our team about personal and business taxes, IRS tax deadlines, payroll taxes, IRS tax relief and tax problems such as IRS notices, payroll tax debt, delinquent taxes and more.
Start with a free consultation—we’re here to help you understand your options around IRS notices and communicate or negotiate on your behalf. With a trusted tax partner at your side, you will have greater clarity and more peace of mind.