Simpler IRS Notices

0:00 Ralph: The question for today is have you received the notice from the IRS recently, that left, you scratching your head. Well, stay tuned to find out what's changed and how you can respond appropriately. This is an episode you don't want to miss.

0:41 Welcome back to the show on this tax talk Thursday, where we're talking about the IRS new simplified notice. Yes. You heard me, right. The IRS has simplified their notices . If you've ever received notices from the IRS, you know, it can be intimidating. And downright confusing, trying to figure out what they want from you. Trust me. I do this as a professional and sometimes I got to try to figure this out. Well, the good news is the IRS has completely overhauled their notice system to make it easier for taxpayers to understand, at least that's their goal. These new simplified notices is rolled out just this year. So my friends, this is some hot off the press information. If you asked about the Ask Ralph Show. are we bringing relevant content? Well, this is new and hot and right off the presses.

1:23 So in this episode, we're going to go over what prompted these changes. What exactly is different about the new notices And most importantly, how you should respond if you receive one. You need to be prepared and know what to do when this happens. So you might ask Ralph what's my goal. My goal is today by the end of this episode, you'll feel empowered and ready to handle the IRS notice professionally and promptly. Now that said, I'm going to highly recommend you reach out to somebody like myself to help you with this because you don't want to navigate with the IRS by yourself. Now don't forget to subscribe to our show and join our email list. You can do that at askralphpodcast.com. So you don't miss tomorrow's show. When we're going to be discussing what to do when you inherit an IRA.

2:04 So that's a great episode. You don't want to miss that one. So first today let's discuss why the IRS decided to simplify their notices in the first place. Some background information. So back in 2021, they did a comprehensive review of their notification system. You know, they send over 170 million notices. And they did this review to see where improvements could be made, believe it or not. Yes. The IRS looked for ways to improve themselves. What they found was that many taxpayers. In fact, what they found over 20%, in some cases, either didn't respond to certain notices. Or didn't respond in ways. That actually resolved the issue. So what they found, you know, they were sending out all these notices.

2:44 And as much as 20%, they didn't understand them. They weren't responding, they weren't responding in the correct way. So they said we got a problem here, folks. So upon surveying taxpayers, the IRS realized the primary problem was, there notices were too complicated. Yes, they were. I mean, page after page of their paragraph, every paragraph of legal and accounting jargon that the average person had no idea what they were saying. I don't know what they were trying to accomplish it on the, who those original notices were written to, but they weren't written anybody that understand the English language. people found the language confusing and weren't sure what steps to take. So the IRS set out to transform their notice system to make it more user-friendly. How did they do that? Ralph? Well, they truly involved tax professionals and everyday taxpayers in redesigning the notices to ensure that it will be easy to comprehend.

3:29 Now I've seen some of these new notices. And they are much more streamlined. They are easier to understand. So what was the result? The result is this new plain language notice project. That's the name of the project that launched this year? And the goal was all IRS notices have been rewritten in clear, simple language and formatted in a standard way. That's easy to follow. So let's talk about what exactly has changed. Here are some key improvements. This one is vital. A clear subject line that summarize the purpose of the notice. In the past, they had a lot of notice numbers and notice jargon. Now there are notices cut straight to the point where a clear subject line that summarizes, what is the issue?

4:12 They then explain what the situation is in plain language in detail. before they would have paragraph after paragraph of all kinds of tax codes, citations in section this and section that. And people didn't understand them. So for example, Let's say that you prepared your tax return last year and you forgot to include the interest income you got from your bank. Well in these new notices, it would simply say, Hey, by the way, Mr. Ralph. You filed your tax return last year, but oops, you forgot to include the $12.15. You got in interest income from your bank. So here's what you need to do to resolve that. And the way they've changed these new notices, they have bullet points and tables and set a big blocks of texts.

4:56 Like seriously folks, if you've ever seen one of their older notices, They would write three or four pages about this particular issue. I just mentioned, IRS code says, you must do this, the IRS code says, you must do this and you didn't do this and you didn't do that. When it's really a simple issue of, Hey, you had interest income from the bank. The bank sent us the information. The bank sent you a 1099 and you never put it on your tax return. So this new notice system is supposed to resolve that. The other thing it does is it gives clear action items telling taxpayers what steps to take. So in our example, I haven't seen this notice for this particular issue, but what it should say is, Hey Ralph, you forgot to report this interest income.

5:36 First of all, is this correct? Is this your bank account? And guess what we've adjusted your tax return. So now you owe us a dollar. I know it's a silly example, but in that particular case, we said, you only forgot to include $12 in interest income. So you might know a dollar or two. The other thing that it does, which I really like, it gives the contact information and resources, prominently displayed, you know, here's what you need to do to resolve this notice. They even have QR codes on some of these where you can click on the QR code and it takes you to the website. Where you can respond to this now. Listen. While we're here. Be very careful. To make sure that this is in fact an IRS notice. Unfortunately, there are scammers out there who are making up fake IRS notices with fake QR codes to take you to all kinds of crazy things you don't want to get to actually did an episode about.

6:23 Fraudulent QR code. So be on the lookout for those. But if the IRS notice seems to be correct me, if I've got your correct information. the numbers make sense, in this particular case you had that interest income. If you in fact had that interest account or that bank account, then it makes sense to have it. But the whole thing is here. There's less legal and technical terminology. So in other words, the notice is now clearly state what issue was identified, in this case, you forgot to report this income. Why the IRS is contacting me. Well, they're contacting you because guess what? The bank sent us a copy of this, our supercomputers at the IRS, compared it to your tax return to see that you, you hadn't included that. And then the next thing you want to say is what do you do to fix this?

7:04 Well, in this case, They've already fixed it for you. They say, Hey Ralph is another dollar, $2, whatever that is. And if you disagree with them who to call to help. And the truth is this is fantastic news for everyone who's ever felt. bewildered and anxious about an IRS notice, and that scares people. Trust me. Clients will call me and say, Ralph. I got home from work today. And I had this notice in my mailbox. What do I do? In fact, if you go back a week, we did a podcast episode about what to do when you get an IRS notice, what does that mean? If you owe the IRS, I would encourage you to go back and listen to that. And while you're there, we've got two or 300 episodes of information out there that we've put out there over the last several years that you can go back and take a look and take a listen to and see if it affects you in a good way, you know, use that for your knowledge.

7:46 So the days of trying to decipher pages of convoluted government jargon are gone. At least that's the plan. Now let's talk about what to do. If you receive one of these new simplified notices. I want to just leave you with, Hey, here's a notice. Figure it out on your own. Let me give you some action steps at the Ask Ralph program. That's always what we're about. Action steps. So number one. Don't panic. The notice likely isn't as scary as it seems. you're not going to jail like Al Capone for tax evasion. Now, to be honest with you, if you've done something wrong, then this notice could be a little scary. But if you've done the right things and it was just an oversight on your part, or, sometimes IRS actually makes a mistake. So don't assume that what they're saying is correct. So first thing is don't panic. Take a deep breath and read through it carefully.

8:28 And focus on the action items. Number two, make sure you understand the issue. If anything is unclear, contact the IRS, using a phone numbers. Only notice. Ask question now be prepared. You might be in for a wait. If you had somebody prepare your tax return, actually, I would recommend reaching out to them first. Now if it's the situation like we talked about where you forgot to include an interest income number. My guess is you probably forgot to give that to your tax person as well. So I don't know if you need to contact them for that. Let's move on to. Step number three. Gather any documents or records you need to respond? The notice will tell you specifically what documentation you need to provide now in our situation. I would go back and take a look and see, oh, let me log into the bank account.

9:10 Oh, that's right. They did send me an interest statement for $12 in whatever sense. I can't remember what I said, but $12.15, whatever that number is. Oh, yeah. You know what the IRS is correct. So, what do I need to do? So number four, choose your response method. You can usually respond by mail telephone. A lot of times they have a fax. Or electronically through the IRS website is be careful. You're actually going to the IRS website, make sure you're using your irs.gov account that you should have set up. And pick whatever works best for you. Now in this particular case, maybe the simple resolution is, Hey, Ralph, we sent you this notice you owe us a dollar. Well, you know, cut the check for a dollar or go online, irs.gov and paid electronically and be done with it.

9:51 Now here's the key. This is action. Step number five. Take action by the deadline. Every one of these notices will state clearly when a response is required. Mark your calendar. make sure you're responding to them in a timely fashion because you don't want to end up with the followup notices or the intent to levy notices. And action. Step number six. Seek help if needed. Like I said, in this case, this was a really simple issue, but let's say that. The issue is a little more complicated. let's say for example, that you are going through a divorce and you have a custody arrangement where, husband and wife are sharing custody of the kids. And one of you claim the child and you shouldn't have claimed the child. Then the IRS is very likely to send you a letter to says, Hey, guess what?

10:33 Two people have claimed the same dependent. Now this is a bigger issue than something simple. So in that case, you're going to want to seek help, Don't hesitate to enlist the help of a tax pro like myself. While I'm talking about that. If you need my assistance, I don't care where you're located. I can help you all over the United States. You can go to askralphpodcast.com/store. There you can book an appointment with me or consultation me and I'll help you. The key to all of this. Is do not stick your head in the sand and hope the problem goes away. If you receive one of these notices, it's not going to go away. And now that they're clearly written, you have no excuse not to address the issues. Head on. Take it step-by-step and provide requested info by the deadline. It's really that simple.

11:13 So before I wrap up again, I want to remind our listeners to visit our podcast page. Again, that's at askralphpodcast.com. When you're there, you can leave us a review, share your thoughts, send us a message with questions, click on the little microphone icon and tell us, Hey Ralph, you're doing a great job or tell us, Hey, I've got this idea or I've got this question. Ralph, I got this notice, whatever those things are, don't leave a lot of personal information. But if you think of an idea that would be great for us to cover while we're on the show that let's do that, we've had a lot of listeners do that. You've heard in some of the recordings. And while you're there, make sure you join our email list to enter in our $25 weekly, Amazon gift card drawing. we're trying to build listeners. And one of the ways we're doing that is given away this weekly Amazon card drawing. So while you're there, you can also schedule a consultation with me to discuss your specific circumstance.

11:58 if you need help with taxes or if you need help with financial counseling. I'm here to help you. That's my goal. So in closing. The IRS new simplified notices are great news for taxpayers and they really are folks, the IRS has really done a good job of making this a simpler process. No longer, do you need to have an accounting degree or a degree in astrophysics to figure out what they want from you? So let's talk about our key takeaways. Just one more time. we'll recap. The IRS overhauled their notification system to make notices easier to comprehend. And notices now use plain language standard format and clear action steps. We got to love that. And again, don't panic. If you receive a notice. The new versions are straightforward, follow the steps, gather the documents, and if you need help, seek help.

12:39 So as always feel free, like I said, to visit our website for more information, go back and listen to our prior episodes. And as I always say, stay financially savvy and God bless you. Abundantly.