IRS Letter 649 is an official communication titled a “Notice of Adjustment” sent by the Internal Revenue Service (IRS) to inform taxpayers of a change or update made to their tax account. This adjustment can result from discrepancies between the information you reported on your tax return and data the IRS receives from third parties, such as employers, financial institutions, or other government agencies.
Why is Letter 649 Sent?
The IRS sends Letter 649 to notify you about:
- Adjustments to Your Tax Return: Differences between reported income, credits, or deductions on your filed return and the information the IRS has received.
- Account Transactions: Updates reflecting tax payments, credits, or other activities affecting your balance.
- Verification Requests: Occasionally, the letter may ask for confirmation or additional information regarding your tax account.
What Does Letter 649 Include?
When you receive Letter 649, it will typically contain:
- Notice Date and Number: Identifies when the notice was issued and its unique reference (649).
- Taxpayer Information: Your personal details for identification.
- Description of Adjustment: Clear explanation of the changes made, why they occurred, and how it affects your tax liability or refund.
- Amount Due or Refund Change: Specifies if you owe additional tax, will receive a refund, or if there is no financial change.
- Response Instructions: Guidance if you need to respond or take action, including deadlines.
- IRS Contact Details: How to contact the IRS for questions or to dispute the adjustment.
How Should You Respond?
- Carefully Review the Notice: Compare the IRS’s adjustment with your tax records—including W-2s, 1099 forms, and deductions claimed.
- If You Agree: Pay any balance owed by the due date to avoid interest and penalties. You can pay online, by mail, or phone. If the adjustment results in a refund, the IRS usually issues it automatically.
- If You Disagree: Respond promptly following the instructions in the letter. Provide supporting documents like corrected forms, bank statements, or receipts to substantiate your position.
- Maintain Copies: Always send copies of your documentation and keep records of all communications.
Common Reasons for Adjustments Leading to Letter 649
- Unreported or Underreported Income: Income reported by employers or financial institutions that wasn’t included on your tax return.
- Incorrect or Ineligible Credits/Deductions: Claimed tax credits or deductions that the IRS determined were inaccurate.
- Math Errors or Filing Mistakes: Calculation errors or omissions.
- Tax Law Updates: Retroactive changes to tax laws affecting your return.
Who Might Receive Letter 649?
Any taxpayer who has filed a return can get this notice if the IRS finds discrepancies or needs to adjust their account. It could affect individuals, businesses, or other entities.
Tips for Managing IRS Notices
- Stay Organized: Keep thorough records of income, deductions, and tax documents.
- Respond Timely: Ignoring notices can lead to increased interest, penalties, or enforced collections.
- Be Clear and Detailed: Provide complete information whether you agree or contest the adjustment.
- Seek Professional Assistance: Consider consulting a tax professional if the notice is complex or the amount involved is substantial.
Frequently Asked Questions
Q1: What if I can’t pay the amount owed?
The IRS offers payment plans such as installment agreements or offers in compromise. Contact them early to explore options.
Q2: How long does the IRS have to adjust my return?
Generally, the IRS has three years from your tax return filing deadline to assess additional tax, except in cases of fraud or substantial underreporting.
Q3: Will Letter 649 affect my refund?
Yes, if the adjustment increases your tax liability, any refund may be reduced or eliminated. If it favors you, your refund could increase.
Additional Resources
For more details, visit the IRS page on Understanding Your IRS Notices and Letters.
Understanding and addressing IRS Letter 649 promptly can help prevent unnecessary penalties and keep your tax records accurate. If you have further questions or complex issues, a tax professional can provide valuable assistance.