Why IRS Notices Have Increased and What It Means for You

You’re not imagining things if it seems like more people are getting letters from the IRS these days. IRS notices have become much more common in recent years, but this isn’t always due to taxpayer mistakes. The agency now has access to more information and improved systems for checking that data against tax returns. Learn why notices are increasing and what’s important for you to understand.

1. Expanded Third-Party Reporting

The IRS receives copies of income documents directly from businesses, banks, employers, and payment platforms. That means the agency can compare what was reported to them with what you reported on your tax return. If something doesn’t match, a notice is often automatically generated.

2. Automated IRS Matching Systems

The IRS uses automated matching programs to compare tax returns with:

• W-2s

• 1099 forms

• Brokerage statements

• Mortgage interest statements

Systems are faster and more efficient than ever. Even small discrepancies can trigger a notice.

3. More Digital Payment Platforms Reporting Income

With the growth of Venmo, PayPal, Square, Stripe, Etsy, Airbnb and other digital platforms, more transactions are being reported to the IRS.

A lot of taxpayers are often caught off guard when they find out that earnings from side jobs, freelancing, online selling, or short-term rentals can now result in IRS reporting forms.

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The Most Important Thing: Don’t Ignore an IRS Letter

Receiving an IRS notice does not automatically mean you did something wrong. Many notices are triggered by reporting timing issues, missing forms, or simple mismatches.

However, ignoring a notice can:

• Increase penalties and interest

• Escalate the issue

• Limit your response options

• Lead to collection activity

• The worst thing you can do is nothing

If you receive an IRS letter:

1. Don’t panic.

2. Don’t automatically pay it.

3. Don’t ignore it.

4. Send it to us right away!

We will review your notice, check it against your return, confirm the IRS's findings, and respond for you. With more reporting and automated checks, IRS notices remain frequent. So accurate reporting and professional review are key. For questions about 1099 income, digital payments, or any IRS notice, contact us for prompt assistance.