The extended May 17th IRS tax deadline has passed and most of us will breathe a sigh of relief as refunds arrive or tax payments clear the bank. Another year done!

But what if weeks or months after you thought you were done with taxes, you receive a notice there was something wrong with your return? Maybe the notice stated the return was prepared incorrectly or that they intend to audit it or that you owe. Perhaps the notice is so unclear you cannot tell what they want. What should you do?

The good news is, more likely than not, the notice is about a minor issue that can be cleared up quickly. In fact, you have less than a 1% chance of being audited. So, here is how to decipher a notice from a tax agency and why, more often than not, it is not something that should cause too much anxiety.

Beware of fraud

First, if it is a legitimate tax notice, you should have received it by mail. Most tax agencies, including the IRS, will almost never initially contact you by phone, text, or email. If you receive a communication that you think might be fraudulent, report it to reportfraud.ftc.gov.

Next, make sure that the letter is from a governmental tax agency and not from a company selling tax negotiation or corporate filing services.

For example, the name on the letter might be from the Franchise Tax Service when the official State of California tax agency is named the Franchise Tax Board. It’s easy to mistake one for the other.

One way to be sure is to look at the website address on the notice. The extension should be .gov and not .com or .net. Go to the website to see if it is an official IRS or state tax agency website.

When to respond

Find the notice date on the top or the top right corner of the letter. Next, note the due date of when your response is required. It is usually in bold letters in the body of the letter or at the end. Put the due date on your calendar as a reminder to respond in time.

A legitimate tax notice will give you adequate time to respond, generally 14 to 30 days. Tax agencies will often send several notifications requesting payment and provide you sufficient time to answer before sending a certified letter threatening to lien or levy. If they finally do threaten collection action, the notice will include your rights as a taxpayer and instructions on how to appeal the action.

If you need more time than the letter allows to respond, you should always call the number on the notice. When you speak to an agent, be sure to write down their name and ID number. There is almost always a fax number on the notice. It is a good idea to document all phone calls by also sending a fax. Save the fax confirmation sheets.

If you used a tax professional to prepare your return, you should fax or send a copy of the notice right away through their secure portal. (Email is not a safe way to send tax information to anyone.) Your preparer may or may not have made a mistake, so it is not helpful to blame them at this point.

When to pay

Thankfully, the most common notice and the easiest to respond to is a request for additional late filing penalties, late payment penalties, or interest. The notice will generally contain a table in the body of the letter that has some penalty codes and will state any additional interest charged. Look at the back of the notice to look up the codes.

Sometimes, the charge might be for paying your estimated taxes a few days late. Also, tax programs do a poor job of calculating late payment interest up to the date the return was filed, especially on state income taxes due. If the tax on your return matches the notice, but there is additional interest, it might be that interest was not calculated correctly.

If the notice is for a small amount due, it might make sense to pay the balance. If the agency charged late filing or late payment penalties when you filed and paid on time, you might need to send them proof of when you filed your return (or extension) and paid the tax. Once you send the confirmation, they will generally remove the charges.

What to send

If an agency asks for you to send additional information, make sure to send copies. Never send original documents. I once represented a meat salesman who sent an original Elvis wall calendar with his mileage information to the IRS. Unfortunately, the calendar was lost and so was proof of his automobile expense.

Another common type of letter is one wherein a tax agency is proposing changes to your return. This can happen if income amounts, like interest from a small bank account, were omitted, or if the wrong amounts, like incorrect withholding on a W-2, were reported.

The letter will generally compare what you reported on your return with the amounts that were reported to the agency. If a 1099 or W-2 was missing from the return, the letter might sometimes tell you which form was omitted. If the change is correct and the balance due is reasonable, it might make sense to pay the balance.

There are times when you should not just pay the balance. A taxpayer forgot to include stock sales reported on one of his brokerage accounts. The IRS sent him a letter proposing an adjustment and adding in the gross sales price of the stock sales as income. The taxpayer realized that the IRS did not include the cost of the stock in the calculation. The taxpayer wrote the IRS and sent them the brokerage 1099 with the cost of the stock info.

The agent suggested the taxpayer file an amended tax return to claim the stock sales and the loss. Taxpayers have three years from the date they filed their original return to file an amended return to claim a refund. Filing an amended return with the agent saved the client thousands of dollars in proposed taxes.

Hiring help

Suppose the letter is serious and is calling for an audit. In that case, you might want to consider hiring a tax attorney, a CPA, or an enrolled agent with experience handling tax examinations. (Check their credentials online before hiring.) Also, consider requesting a correspondence examination instead of an in-person or onsite examination to save time and costs.

Chances are, however, that if you received a tax notice, it is probably for something minor. Take care of it right away, and you will not have to think about taxes again until next year.

Michelle C. Herting, CPA, ABV, AEP, specializes in estate, trust and gift taxes, and business valuations. She has three offices in Southern California and serves on the boards of several educational and professional organizations.