New, improved tax notices

Tuesday Jan. 12, 2010
Posted 11 a.m. EDT

The only thing worse than getting a letter from the IRS is getting one that's unintelligible.

The IRS knows that many of its notices are, shall we say, a bit unclear. OK, they can be downright confusing.

But it promises things will get better.

"Tax law is complex enough without us making it more complicated," says Jodi Patterson, who as director of office of taxpayer burden reduction has led the revision effort. So the agency is rewriting all its notices.

The first batch, nine revamped notices, is now ready to go out to taxpayers.

Sure, that's just a tiny portion of the nearly 1,000 different kinds of taxpayer communications that the IRS sends out to 200 million filers each year. But, hey, you've got to start somewhere.

Three new notices immediately caught my eye because they directly affect dollars a taxpayer gets (or not) from Uncle Sam: communications about Additional Child Tax Credit issues, undeliverable refunds and problems with direct deposits.

New look, clearer language: In all new notice instances, the IRS is going for a cleaner, more uniform look. That alone is a great step. Many of the old letters look like they were typed on your grandmother's manual typewriter.

But the main reason for revising the documents, says Patterson, is to write them in plainer language to ensure that taxpayers "understand what they read and what action they need to take."

The revised undeliverable refund notice, for example, cuts right to the chase, telling you that "your refund check was returned to us."

Basically, the new letters will follow the same format, telling taxpayers why they got the notice, what specific action they need to take and by when and what will happen if they don't.

Such a step-by-step approach is the goal in all the notice revisions, says Patterson. What the IRS hopes to do is get rid of the fragmented, inconsistent feel that now exists in every division within the IRS -- from return processing to collection to audit -- generates different notices.

Under the IRS's new Office of Taxpayer Correspondence, which Patterson will lead, the agency will have a unified voice. The business units will continue to determine what needs to be communicated to taxpayers, she says, but the Correspondence office "will say this is how we need to say it. We want notices that are understandable, written for the average taxpayer, have a respectful tone and engage the taxpayer instead of them ignoring us."

And side benefit for the IRS of more clear notices is that fewer taxpayers should need to call the agency, freeing up the phone lines for folks with other tax problems.

Ongoing effort: The notice revisions began 18 months ago with the first group now complete. In addition to the revised notices regarding the Additional Child Tax Credit, undeliverable refunds and direct deposit problems, the IRS this week issued letters about tax-exempt status, employer tax filings, excise tax forms, potential AMT exemption, issues with crediting refund amounts to estimated payments and direct debit installment payment problems.

These nine notices were completed first, says Patterson, because they are among the least complex.

By January 2011, the IRS plans to have all of its collection-related communications redone. And within the next 18 months, says Patterson, the agency expects to have rewritten notices that account for up to 70 percent of its mailings to taxpayers.

I hope you never have to see all this new handiwork. But if you do get a notice, at least now it should be a little clearer.

Read more tax blogs.


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