Why Tax Preparers Should Keep Clients Informed About IRS Notices
IRS notices can be intimidating for clients, but they’re an integral part of tax compliance and could have serious implications if ignored or misunderstood. Helping your clients stay informed about tax-related communications is a crucial aspect of providing excellent service. By doing so, you build trust, reduce the risk of penalties, and foster a smoother tax resolution process.
Here's why handling IRS notices correctly matters and how you can support your clients effectively.
1. IRS Notices May Be Time-Sensitive
Many IRS notices have deadlines for response or payment. Failure to act promptly could result in penalties, interest accrual, or even escalation to collection actions. Tax preparers play a critical role in explaining the urgency of these notices and helping clients take appropriate next steps before deadlines pass.
Pro Tip: Use a client communication system like the tools integrated with Drake Tax to send automated reminders about deadlines to help clients remain on track.
2. Clients May Misunderstand IRS Language
Misunderstanding the nature of a notice—such as whether it's informational, a warning, or an audit—may lead to unnecessary stress or an inappropriate response. As a tax professional, you can interpret the notice and provide clear guidance on how to proceed.
3. Avoid Escalation of Issues
A minor discrepancy flagged by the IRS, if left unresolved, could snowball into bigger problems like garnishments or liens. By staying informed and proactive, you can address issues early and often resolve them with minimal effort.
For example, if a client receives a CP2000 notice for underreported income, you can explain their options for responding—whether that means accepting the changes, providing additional documentation, or disputing the IRS’s findings.
4. IRS Notices May Present Opportunities
Not all IRS communications are negative. Some notices might alert clients to unclaimed refunds or payment plan options. Informing clients about these opportunities demonstrates your commitment to their financial wellbeing and positions you as a trusted advisor.
5. Strengthens Client Relationships
Guiding clients through the process of responding to IRS notices strengthens their trust in you as a tax expert. Your support can help alleviate their anxiety and show them that they’re not navigating these challenges alone.
Actionable Step: Use a secure portal, like Drake Portals, to review IRS notices with clients in real time while keeping their sensitive information protected.
Practical Steps for Tax Preparers
- Educate Clients: Create a guide or email template explaining common IRS notices, like CP2000, CP14, or CP90.
- Be Proactive: During tax prep, inform clients of areas that might trigger an IRS inquiry, such as large deductions or self-employment income discrepancies.
- Offer Resolution Services: Let clients know you’re available to help address notices, even after tax season ends.
Keeping clients informed about IRS notices is a proactive way to provide exceptional service while protecting their financial interests. By offering clear guidance, timely support, and actionable solutions, you may transform what might feel like a crisis into an opportunity to strengthen your professional relationship with clients.
Learn more with a Drake Software Business Success Webinar
With the IRS stepping up enforcement in 2025, learn how to take quick action to help clients avoid liens, wage garnishment, and more with our upcoming webinar on January 9, 2025.
Confidently Navigating IRS Notices to Protect Your Clients
Thursday, January 09, 2025
1:00PM – 2:00PM EST
Community Tax Service Chief Theresa Speights will cover how to provide quick, accurate counsel when it counts.
Missed the webinar? You can access it and all our webinar recordings in the Drake Software Webinar Library.
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