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Tax Notices and What to Do

It is inevitable that many taxpayers will receive notices from the IRS or the State of Colorado about the filing of their tax returns. Often, the notices are generated because the IRS computers are unable to verify narrative data supporting a deduction or tax credit. Notices can also be generated when IRS computers attempt to match information furnished with a Form 1099 (dividends, interest, stock sale, contractor income, etc.) to amounts reported in the tax return. Or it can simply be a mistake.

Recently, Colorado taxpayers have been receiving more than their fair share of delayed refunds and erroneous notices from the Colorado Department of Revenue. This all stems from a massive conversion of their 40-year old computer system in the Fall of 2009. Without any prior notice, the CDOR decided to shut down all processing of tax returns during the months of September and October in 2009.

Around Thanksgiving, CPAs around the state began hearing from clients about notices that turned out to be erroneous, refunds being unduly delayed and the inability to talk to anyone at CDOR. The Colorado Society of CPAs undertook an initiative to meet with CDOR to discuss these issues.

CDOR has responded in a limited fashion and some improvement has been shown. That is little solace, however, to taxpayers who are still waiting for refunds and having to deal with notices that are just flat wrong. This has been an enormous hassle for us, too. We have had to spend a lot of time dealing with these issues, as well as manage the reputational damage when taxpayers assume the notices are being generated because we made a mistake.

These notices will probably continue for some time until CDOR obtains the resources or manpower to fix the bugs. In the meantime, we encourage you to contact us immediately whenever you receive a tax notice. Please do not ever pay a balance due until checking with us, particularly when penalties are assessed. We have experienced much success in requesting an abatement of most penalties.

Despite 30+ years of practicing in the tax area, I still get that same feeling in the stomach that most of you do when you receive a “love letter” from the IRS or CDOR. By all means, do not take the notice lightly, but do not be intimidated either. We are here to protect your interests and your rights.

Call us today to discuss your specific situation and help you put these notices to bed!

IRS Notices

Colorado Notices

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(970) 667-1070
762 W Eisenhower Blvd
Loveland, Colorado 80537

Estes Park

(970) 667-1070
1212 Graves Avenue
Estes Park, Colorado 80517


(281) 665-7973
21398 Provincial Blvd
Katy, Texas 77450

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