Q: I just got a letter from the IRS that says that I owe more taxes because of a rollover. This is a little scary- how should I respond?

A: First- don’t panic. Many letters from the IRS are seeking additional information that a taxpayer may have overlooked. This includes providing the cost basis of a security that was sold. So, the first action you take should be to gather the information.
Second- In the case of an IRA rollover, the IRS will be looking for proof that money was properly sent within the 60-day timeframe allowed. For most rollovers, this can be avoided by sending money directly from one retirement account to another, through a trustee-to-trustee transfer. Sometimes, especially with bank IRAs, this option is not available.

If you used a CPA, to file your taxes, contact them to handle your response. They will respond on your behalf and in a way that should be most effective. If you did not use a CPA, please reach out to us and we can help review what has been requested.