It’s a stressful moment that can stop you in your tracks: a letter from the IRS or your state’s tax agency arrives in your mailbox, and it claims you owe taxes for a business you’ve never operated. Whether the letter references unpaid income taxes, missing payroll reports, or some kind of compliance issue, it’s understandably alarming. What’s worse, tax correspondence can be hard to decipher, and your first instinct may be to panic—or to shove the letter in a drawer and hope it goes away.
But receiving a tax notice for a business you don’t own isn’t uncommon. Mistakes happen, and in some cases, identity theft or clerical errors are to blame. The good news is that there are clear, actionable steps you can take to resolve this—and the sooner you act, the better.
Step 1: Don’t Panic, But Don’t Ignore It
The most important thing to know when you receive a tax notice is that you are not powerless. However, ignoring the letter will never make the issue go away. In fact, delaying your response can make things worse, as interest and penalties may accrue even if the notice was issued in error.
Let’s say you receive a notice from the IRS stating that “ABC Enterprises” failed to file payroll taxes for Q2 of the previous year. You’ve never heard of ABC Enterprises, and you certainly didn’t file paperwork for it. While it may seem obvious to you that the notice was misdirected, the IRS has no way of knowing that unless you respond. Tax authorities operate under the assumption that their records are correct until proven otherwise. That’s why taking immediate action to clarify the situation is essential.
Step 2: Carefully Review the Notice
Before calling anyone or firing off a response, read the notice slowly and thoroughly. Tax documents can be intimidating, but each section contains useful information that will help you understand the nature of the problem. Look at the top of the notice for the agency name and the type of form or letter. If it’s from the IRS, you’ll often see a letter number like CP2000, CP215, or LT11. State agencies may have different formats. Determine whether the notice is informational, a bill, or a warning of enforcement action.
Next, find the details associated with the business in question. Is there a business name listed? An Employer Identification Number (EIN)? Do you recognize the tax year being referenced? If the business name is totally unfamiliar to you and the EIN doesn’t match anything you’ve used in the past, that’s an important clue that this isn’t a simple clerical error on your part.
Also, look for instructions on what the agency is asking you to do. Many notices include a deadline for responding, typically 30 to 60 days. Mark this date down. Even if you plan to dispute the notice, responding before the deadline preserves your rights and prevents escalation.
Step 3: Confirm You’re Not Associated With the Business
It may sound unnecessary, but before you reach out to the IRS or state agency, double-check that you truly have no connection to the business in question. Sometimes, issues arise due to shared names, similar addresses, or even a past business that was dissolved years ago. Consider this example: you previously operated a sole proprietorship called “Taylor’s Cleaning Services” but closed it five years ago. Now you’re receiving a notice about unpaid taxes from a business named “Taylor’s Janitorial Services,” which you’ve never heard of. It’s possible that a data entry error, or an old business license or EIN still connected to your name, triggered the notice.
Check your old business records, including previous EIN assignments, fictitious business name filings, and Secretary of State registrations. If the name on the notice bears any resemblance to something you once registered—even if inactive—include that detail in your eventual response. If you’ve never owned or operated a business at all, or if the name on the notice is completely foreign, that points to either a mistaken identity or a deeper issue like identity theft.
Step 4: Contact the Issuing Tax Authority
Once you’ve gathered your information and reviewed the notice, it’s time to contact the agency that sent it. This could be the IRS, your state’s Department of Revenue, Franchise Tax Board, or another taxing body depending on the nature of the notice. Most notices include a phone number on the first page, along with office hours. When calling, be prepared to verify your identity. You’ll typically be asked to provide your full name, address, Social Security Number or Individual Taxpayer Identification Number (ITIN), and details from the notice, including the notice number and tax year.
If the representative confirms that the business in question is associated with your name or SSN, ask for details about how that connection came to be. For example, was a business tax return filed using your SSN? Was your name listed as a responsible party for an EIN? If the agent confirms that you are not in their records as being associated with the business—or that your name was added in error—make sure to request written confirmation that your account is clear. Document the name of the representative you spoke with, the time and date of the call, and the resolution offered. In cases where the issue cannot be resolved over the phone, you will likely need to follow up in writing.
Step 5: Dispute the Notice in Writing
When a tax agency needs formal clarification or documentation, the most effective approach is to write a clear, concise dispute letter. Your letter should include the following elements:
- A statement that you are not associated with the business in question.
- A reference to the notice number and tax year.
- A summary of your findings, including that you have no business licenses, EINs, or tax returns related to the business name or address provided.
- A request for the notice to be withdrawn or corrected.
Send your letter via certified mail with return receipt requested. That gives you proof that the agency received your correspondence. Include a copy of the original notice and any documentation that supports your claim, such as prior EIN correspondence, identity verification documents, or a declaration of identity theft if applicable.
If you suspect that your personal information has been used to fraudulently open a business, take additional steps. For IRS-related issues, complete and submit Form 14039, Identity Theft Affidavit. You may also want to file a police report and contact the Federal Trade Commission via IdentityTheft.gov. In some state jurisdictions, you may be asked to submit a notarized statement or sworn affidavit. Always follow the specific instructions outlined in the notice.
Step 6: Protect Yourself Moving Forward
Even if the issue is resolved in your favor, take this opportunity to safeguard your identity and monitor your tax records more closely going forward. Tax-related identity theft is on the rise, and proactive monitoring is one of the best ways to catch problems early. Start by creating an account on the IRS website, where you can view your current tax records and verify any businesses or tax filings associated with your SSN or ITIN. Most state tax agencies also offer online portals where you can review any business registrations or liabilities.
You may also wish to place a fraud alert on your credit file, which notifies creditors to take extra precautions before extending new credit in your name. In more serious cases, a credit freeze can be requested through all three major bureaus—Experian, Equifax, and TransUnion—which prevents new accounts from being opened altogether. Consider subscribing to an identity monitoring service that alerts you to any new business filings, EIN registrations, or changes to your credit. These services are especially helpful if your SSN was misused by someone to register a business or obtain credit in your name.
Keep records of all correspondence related to the incident. Even after a case is closed, agencies can reissue similar notices in error, and having your previous documentation handy will make it easier to prove the issue was already addressed.
Tax Help for Victims of ID Theft
Receiving a tax notice for a business you don’t own is tough, but it doesn’t have to derail your peace of mind or cause lasting damage. Whether the notice was triggered by a clerical error, mistaken identity, or potential fraud, following the proper steps—from reviewing the notice, confirming your non-involvement, and disputing the issue in writing—can lead to a full resolution. If the situation feels overwhelming or if the notice involves significant amounts of money or unresolved filings, don’t hesitate to consult a tax professional or attorney. You don’t have to navigate this alone—and with the right support, you can protect your name, your finances, and your peace of mind. Optima Tax Relief is the nation’s leading tax resolution firm with over $3 billion in resolved tax liabilities.
If You Need Tax Help, Contact Us Today for a Free Consultation