Notice of State Income Taxes Due
A notice of state income tax due is just one type of notice a state government tax authority may send you. It will state that you owe the state government tax money, even if you’ve already filed your state tax return. The notice will likely include a payment voucher and a summary of the balance due. For example, California’s Franchise Tax Board lists nearly three dozen notices it may send, covering everything from requests for additional documentation to confirming whether or not you will be itemizing deductions.
Steps for Responding to a Tax Notice
Act Fast
Don’t put the notice aside for later. Read it carefully and make sure you understand what it says. If you can respond to the notice immediately, do it because it could escalate into second and third notices, or result in a tax lien eventually. If you agree with the notice and understand it, you should be able to take action fairly quickly. Many websites allow you to upload documents or make payments, which could be much faster than mailing in forms and payment vouchers. If you believe the notice is inaccurate, you’ll need to start gathering evidence.
Gather Evidence
You must have documentation to support your claim. For example, make sure you have bank records to back up your claim if the state is saying that you didn’t make a payment when you actually did. A canceled check is best, but a bank statement will do if you paid electronically. You may also need tax documents, your Social Security number, and other personal information.
Ask a Professional for Help
If you feel like you’re in over your head, consider contacting a tax professional. You should definitely have a professional advocating on your behalf if you’re trying to dispute something based on an interpretation of a state tax law or if you’re dealing with the IRS. Contact an enrolled agent (EA), a certified public accountant (CPA), or a tax attorney before you do anything. These professionals are permitted to represent you before your state tax agency or the IRS. The Taxpayer Advocate Service (TAS) can help with tax disputes with the IRS and might be able to steer you to a professional to help with state tax matters.
Ask a Lot of Questions
If you contact the state tax authority yourself to discuss the notice, be sure to ask a lot of questions so that you have all of the information you need. If you’re able to speak with someone on the phone, get their name and information in case you need to attribute anything back to them in the future. Find out whether there’s a specific procedure for appealing a tax assessment, what type of documentation you’ll have to provide, and to what address you should send a protest letter.
Write a Letter
A letter can present a persuasive argument for your case, but make sure you have evidence to support all your claims. It’s absolutely essential to include the Social Security number or other tax ID number that you used on the tax return in question. You’ll also need the notice number if it’s included in the notice you received. It’s possible that no one will be able to help you if you can’t provide this information. Be sure to attach copies of your relevant documentation, and note the attachments in the letter. Mail the letter by certified mail so you can be sure it’s delivered and signed for. The IRS provides a list with other contact information for all states via their websites.
Follow Up
Wait a couple of weeks for your letter to be processed, then follow up with a phone call if you haven’t received a response. Some states enter correspondence into a computerized registry. They might be able to tell you whether your correspondence was received and who is handling it.
