To write a letter of explanation to the IRS, create a concise, polite, and factual document including your full name, address, Social Security Number (SSN), and the notice number. State the purpose clearly, explain the situation, list supporting documents, and send it via certified mail within the specified deadline.
Sample Letter to the IRS
The IRS mails letters or notices to taxpayers for a variety of reasons including:
IRS Penalty Abatement Request Letter
Example 1: Late auto payment
123 Main St. Dear Mr. or Ms. (name of person requesting the letter of explanation), This letter explains the item you asked about on my credit report: Late payment to First Auto Bank for car loan dated 05/01/2020.
Writing this letter is often simpler than it sounds. All you need to do is clearly explain the situation, provide any relevant dates, and include any documentation that supports your explanation. Being honest and direct can help your lender better understand your financial picture and keep your loan on track.
How to write an explanation letter in 3 steps
One-time forgiveness, officially known as First-Time Penalty Abatement (FTA), is an IRS program that allows qualified taxpayers to have certain penalties removed from their tax accounts.
In your formal protest, include a statement that you want to appeal the changes proposed by the IRS and include all of the following: ∎ Your name, address, and a daytime telephone number. ∎ List of all disputed issues, tax periods or years involved, proposed changes, and reasons you disagree with each issue.
You can settle back taxes by setting up a payment plan, applying for hardship status, or requesting a reduced settlement if you qualify. The IRS will ask for details about your income, expenses, and assets. You'll need to file all missing tax returns before they agree to any settlement.
You know the IRS might be investigating you through official mail (first contact), phone calls (often with automated messages to IRS.gov), or in-person visits, but signs of a criminal probe include contact with IRS Criminal Investigation (CI) agents, subpoenas to you or your bank, questions to your accountant/bank, unusual account activity (freezing/refusing transactions), or agents suddenly going silent after an audit. Key indicators are official IRS letters, contact from CI special agents, third-party inquiries, and formal summonses for records, signaling serious scrutiny beyond a simple audit.
If you receive an IRS notice or letter
We may send you a notice or letter if: You have a balance due. Your refund has changed. We have a question about your return.
Contact an IRS customer service representative to correct any agency errors by calling 800-829-1040 (see telephone assistance for hours of operation).
The biggest tax mistakes people make include filing late, math errors, incorrect personal info (like Social Security numbers), forgetting deductions/credits (like EITC), misreporting income, not signing forms, and making errors with bank details for direct deposit, all leading to delays, penalties, or missed savings, with using tax software or professionals helping avoid these common pitfalls.
Consider Certified Mail: For added security and proof of delivery, you may choose to send your mailpiece via certified mail with the return receipt requested. This provides confirmation that the IRS received your documents.
The taxpayer should include information and documents for the IRS to review when considering the dispute. People should allow at least 30 days for the IRS to respond.
6 Essential Tips for Writing a Letter to the IRS
To be eligible, you must meet a few specific requirements. One is that you must be current with all your tax filing requirements. This means you can't have any unfiled tax returns. The IRS won't even consider tax forgiveness if you haven't filed all required returns for previous years.
The IRS 7-year rule primarily applies to keeping records for claiming a deduction for bad debts or losses from worthless securities, allowing a longer period to file for a credit or refund, but it's not a universal audit limit; it's often a recommended safe buffer for general record-keeping, with the standard IRS audit period usually being 3 years, extending to 6 years for substantial income omission (over 25%) or foreign income issues, and indefinitely for fraud.
If you have since returned to the workforce, including recent pay stubs or other proof of the new job and its pay can be helpful. Similarly, if your letter of explanation is about a past credit issue, you can include a recent copy of your credit report that shows your improved credit score.
STRONG OPENING STATEMENT Identifying the process to be explained. Emphasize the process rather than the particular thing involved in the process. SEQUENCING Use sequential paragraphs or statements describing how or why something happens. Show connections such as cause and effect or temporal sequence.
How to write a Notice to Explain?