What should you do if you have problems with the IRS? Here is advice to help you during that stressful time.

How do you deal with a problem like the Internal Revenue Service? And how do you deal with your own tax problems as they pertain to the IRS?

To be clear, I’m not talking about major problems like righteously owing lots of money for back taxes, plus interest and penalties, or being investigated for tax fraud. Folks in those situations need professional help from a CPA or tax attorney.

After all, more than half of the $80 billion in supplemental funding in the Inflation Reduction Act would be earmarked for more tax-compliance enforcement.

Officials, including Treasury Secretary Janet Yellen and IRS Commissioner Charles Rettig, a Trump pick to lead the agency in 2018, have pledged that the extra enforcement would not be directed at small businesses or households making less than $400,000.

The IRS plans to double its workforce. The agency says its full-time head count last year was almost 79,000, a roughly 13% decrease from its size in 2012. (The U.S. population increased by roughly 8% over that span.)

The money for the IRS — which would supplement annual congressional appropriations — is supposed to boost the number of audits of corporations and wealthy people, upgrade IRS technology, improve customer service and rebuild the staffing ranks.

This column is not addressing tax fraud or evasion. Instead, I’m talking about mundane problems like not receiving your tax refund or dealing with an erroneous IRS notice. With those thoughts in mind, here are some observations and advice:

How long should I wait for a refund?

According to the IRS website, you should receive your refund within 21 days of filing your return if you e-filed, assuming no problems with the return. 

But if you filed a paper return, the IRS says it could take six months or more to process your return if you file by mail. Great, especially the or more part. Based on some cases I’m familiar with, it could take a lot more than six months. 

Advice: The next step for a missing refund in either case is to check Where’s My Refund? on the IRS website. No dice? The IRS advises you to check with your tax preparer. If you did not use one, consider hiring one to track down your refund. 

I’m talking about mundane problems like not receiving your tax refund or dealing with an erroneous IRS notice.

More Advice: From now on, e-file. There’s no question that will give you a faster result. When you file your return, enter the info for the bank account where you would like your refund to be auto-deposited. Should I use a professional tax preparer?

Maybe. If your return is super-simple and big dollars are not involved, you should probably e-file your own return using a tax software site like H&R Block
or Turbo Tax
If your return is not super-simple and/or big bucks are involved, I recommend hiring a pro to prepare the return. Then, if things get messed up, you have somebody to deal with the IRS on your behalf. Experienced tax pros are good at that. Amateurs are not.     

Also see: The Inflation Reduction Act sends $80 billion to the IRS, but some tax experts wonder if it’s enough for the badly backlogged agency

How do I resolve a Form 1040 error?

Say you receive an IRS notice stating that a deduction claimed on your Form 1040 has been denied, or the notice states that you calculated a tax credit wrong. As a result, you’re being told you owe additional tax or that your refund has been adjusted downward. 

However, upon further review, it’s clear that your deduction or credit was calculated properly. The IRS notice is clearly incorrect. 

Good news: the notice includes a phone number if you disagree with what the notice says. Bad news: if the problem relates to a business deduction or credit claimed on your Form 1040, you may get bounced between the IRS folks that handle business returns and the folks that handle personal returns. 

Trying to respond to an erroneous IRS notice by phone before the 60-day deadline will be a challenge.

Advice: You have 60 days to respond to an IRS notice that you disagree with. Trying to respond to an erroneous IRS notice by phone before the deadline will be a challenge, given their limited resources.

I recommend responding in writing to the address shown on your notice. Send your written response by USPS certified mail, return receipt requested. Getting the return receipt back will prove that you filed your response before the 60-day deadline. 

But please mail in your response way before the 60-day deadline, because you may or may not get a return receipt back. In other words, give yourself plenty of time to do everything at least twice, and do it in writing.  The bottom line

The Internal Revenue Code is incredibly complicated and IRS employees must constantly grapple with the ever-changing rules. Dishing out billions of dollars in COVID-19 relief payments in recent years put enormous pressure on the agency. 

(Andrew Keshner contributed to this report.)

Read previous Tax Guy columns:

Does inflation affect Social Security taxes withheld from your paycheck? Yes, and it’s not pretty

Financial Face-Off: Should I try to sell my house in this uncertain market, or keep it and rent it out?

Didn’t win the Mega Millions jackpot? You still need an estate plan — here’s what to do

Learn how to shake up your financial routine at the Best New Ideas in Money Festival on Sept. 21 and Sept. 22 in New York. Join Carrie Schwab, president of the Charles Schwab Foundation.

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