Americans who filed their federal income tax returns in mid-April may think they're done with the Internal Revenue Service for the year. But some 3 million of them will soon be receiving "Dear Taxpayer" letters pointing out problems ranging from simple math errors to questionable itemized deductions.
There's no need to panic, tax experts advise. Often the questions are easy to answer or misunderstandings easy to clear up.
"Don't assume that just because you're getting a notice that you've done something wrong," said Eric Tyson, co-author of "Taxes 2007 for Dummies." "You may not have made a mistake."
He added that "a lot of the issues are fairly easily dealt with," often by providing additional documentation.
That doesn't mean the taxpayer should throw the letter in a drawer and forget about it, Tyson said, suggesting a quick call to the IRS could resolve the issue "or at least get the process going."
IRS spokeswoman Nancy Mathis said millions of notices go out in May and June each year based on the April tax filings. Last year, some 3.1 million notices were sent.
"It could be about an inaccurate Social Security number, or a deduction we don't understand or that somebody subtracted wrong," Mathis said.
If the return wasn't signed, it will be mailed back with a cover letter for that signature before it's processed, she added.
In addition, the IRS will send out more than 3 million copies of its CP 2000 Notice of Underreported Income this year.
These forms, which are based on 2005 tax-year filings, are more serious and generally propose changes to the individual's tax return that result in more taxes due.
"In this care, there is a discrepancy," Mathis said. "Basically, your return doesn't match up with the information we have. We tell the taxpayer what that is and propose what the settlement might be."
Mel Schwarz, a national tax partner with Grant Thornton LLP, an accounting firm headquartered in Chicago, said most taxpayers can handle the correction of simple errors on their own, directly with the IRS.
Schwarz did so himself last year.
"I wrote down my son's name, which is the same as mine except for a different middle initial, and then I wrote down my Social Security number after his name," he said.
The IRS disallowed the exemption for his son, recalculated the taxes due and sent a letter to Schwarz requesting payment.
Schwarz straightened out his error with a phone call to the IRS, he said.
Taxpayers who make similar calls should remember to keep track of the IRS worker's name and employee number as well as the date "so if anything else comes up, you have a record to trace back to," he said.
He said that if taxpayers do have to correct their federal tax returns, they also need to take a second look at their state returns to make sure the error wasn't repeated there, he said.
"If taxes are due, sometimes you may have to pay interest, but typically you're not subject to penalties," Schwarz said. "But stick this letter away and try to forget it and six months later, you really do have a problem."
Donna LeValley, contributing editor for J.K. Lasser's "Your Income Tax" guide, said taxpayers who used professional preparers should go back to them if the IRS questions the return.
"At the very least they may help you formulate an answer that is acceptable to the IRS," she said.
LeValley also said that if you did make a mistake _ for example, you forgot to report the interest or gains on a savings account and you owe more taxes _ you should "fess up, pay up and cut your losses."
On the other hand, "if you think you're right, then you and a tax professional, should try to fight it," she said.
Some taxpayers may discover that they've made a mistake even before the IRS does.
In this case, LeValley recommends that they file a Form 1040X, Amended U.S. Individual Income Tax Return.
"Don't ever hesitate to beat them to the punch and file that amended return ... especially if the mistake is in your favor," she said.
LeValley added: "Anyway, if you get it to them first, the IRS will likely give you the benefit of the doubt because you're being forthright."