What to Do If You Receive a Letter From the Ohio Department of Taxation

Receiving a letter from the Ohio Department of Taxation can be concerning, but it doesn’t always mean you’re in trouble. These notices are often routine and may simply require clarification or additional information. Ignoring them, however, could lead to penalties or further complications.

Understanding why you received a notice and knowing how to respond can help resolve issues efficiently and prevent unnecessary stress.

Common Reasons for a Notice

A letter from the Ohio Department of Taxation often results from discrepancies in reported income, deductions, or credits. If the figures on your state return don’t match information from employers, financial institutions, or the IRS, the state may request clarification. For example, if your W-2 or 1099 forms show higher earnings than what you reported, the department may ask for an explanation or additional tax payment.

Filing errors also trigger notices, especially miscalculations or missing information. A simple mistake, such as entering the wrong Social Security number or failing to include a required schedule, can prompt a letter. Even if the error is unintentional, the state may adjust your return and recalculate your tax liability, potentially resulting in a balance due or a reduced refund.

Unpaid taxes from previous years can also lead to a notice. If you have outstanding liabilities, the department may send a reminder or demand payment, sometimes with added penalties and interest. Ohio law (R.C. 5747.15) allows the state to assess late fees and interest on unpaid balances, which can accumulate quickly if left unresolved.

Types of Letters You Might Receive

The Ohio Department of Taxation issues different types of notices depending on the issue. Some letters inform taxpayers of outstanding balances, while others request identity verification or additional documentation. Understanding the purpose of each notice helps determine the appropriate response.

Delinquency Notice

A delinquency notice is sent when the state believes you failed to file a required tax return. This can happen if the department has records indicating you earned income in Ohio but did not submit a return for a specific year. The notice typically includes an estimated tax liability based on available information, such as W-2s, 1099s, or prior-year filings.

If you receive this letter, you may need to file the missing return or prove that you were not required to file. Ohio Revised Code (R.C.) 5747.08 requires residents and certain nonresidents to file a state income tax return if their income exceeds the filing threshold. Failure to respond can result in penalties, including a late filing fee of up to $50 per month (capped at $500) and interest on any unpaid balance. If the state determines that you intentionally failed to file, additional penalties may apply.

Assessment Notice

An assessment notice is issued when the Ohio Department of Taxation determines that you owe additional taxes. This can result from an audit, a review of your return, or a discrepancy between state and federal tax records. The notice will outline the amount due, including any penalties and interest, and provide a deadline for payment.

Ohio law (R.C. 5747.13) allows the state to assess penalties for underpayment, which can be as high as 15% of the unpaid tax. Interest accrues on outstanding balances at a rate determined annually by the Ohio Tax Commissioner. If you disagree with the assessment, you have the right to appeal by filing a petition with the Ohio Board of Tax Appeals within 60 days. Ignoring the notice can lead to collection actions, such as wage garnishment or bank levies.

Identity Verification Request

An identity verification request is sent when the state needs to confirm your identity before processing your tax return. This is a fraud prevention measure designed to protect taxpayers from identity theft. The letter typically instructs you to complete an online verification process or submit specific documents, such as a copy of your driver’s license, Social Security card, or prior-year tax return.

Ohio has implemented enhanced security measures in response to increasing tax fraud cases. If you receive this notice, it does not necessarily mean there is an issue with your return, but failing to respond can delay your refund. If your return includes sudden changes in income or deductions significantly different from previous years, additional verification may be required. If you suspect fraud, you may need to file an identity theft affidavit with the IRS and the Ohio Department of Taxation.

Steps to Take After Receiving a Letter

Reading the letter carefully is the first step in understanding what action is required. Each notice includes specific instructions, deadlines, and contact information. Missing a response deadline could limit your options for resolution.

Gathering relevant documents is often necessary. If the notice relates to a claimed deduction or credit, supporting records such as receipts, invoices, or bank statements may be required. In cases involving residency status, utility bills, lease agreements, or employer-issued statements can help establish where you lived during the tax year in question.

Contacting the Ohio Department of Taxation may be beneficial if the notice is unclear or if you need additional time to respond. The contact information provided on the letter can connect you with representatives who can clarify details or discuss possible solutions. If immediate payment is not feasible, the department may offer installment agreements. Ohio Administrative Code (OAC) 5703-7-19 outlines guidelines for payment plans, with eligibility depending on factors such as the amount owed and prior compliance history.

Consequences of Non-Compliance

Failing to address a notice can escalate the situation from a simple inquiry to aggressive enforcement measures. If a taxpayer ignores a request for additional information or fails to respond to an adjustment, the state may issue a final determination, making the liability legally enforceable. Under Ohio Revised Code (R.C.) 5703.60, once a tax assessment becomes final, the department has the authority to initiate collection actions without further notice.

One of the most immediate consequences is the issuance of a tax lien, which places a legal claim against a taxpayer’s assets. A lien is recorded with the county and can affect credit reports, making it difficult to secure financing or sell property. If the balance remains unpaid, the state can proceed with a levy, seizing bank accounts, wages, or even business assets under R.C. 131.02. Unlike liens, which serve as a claim on property, levies result in the actual transfer of funds to satisfy the debt.

Documentation That May Be Required

Responding to a notice often requires submitting supporting documents to verify income, deductions, or other tax-related claims. Providing accurate records can help resolve the issue efficiently.

For income verification, taxpayers may need to submit copies of W-2s, 1099 forms, or pay stubs if there is a discrepancy between reported earnings and state records. If self-employed, profit and loss statements, bank statements, or invoices may be necessary. For residency status, utility bills, lease agreements, or voter registration records can help establish whether an individual was a resident of Ohio during the tax year in question.

When deductions or credits are under review, supporting documentation such as receipts, canceled checks, or official statements from financial institutions may be required. If claiming the Ohio Earned Income Credit, taxpayers might need to provide federal tax return transcripts or proof of qualifying dependents. For business-related expenses, maintaining detailed records, including mileage logs or depreciation schedules, can help substantiate claims.

When to Seek Professional Assistance

While some tax notices can be resolved independently, certain situations may warrant professional assistance. Complex cases involving audits, significant tax liabilities, or legal disputes can benefit from the expertise of a tax professional, such as a certified public accountant (CPA), enrolled agent, or tax attorney. These professionals can help interpret tax laws, negotiate with the Ohio Department of Taxation, and ensure compliance with state regulations.

If a taxpayer receives an assessment notice and disagrees with the findings, a tax professional can assist in filing an appeal with the Ohio Board of Tax Appeals. The appeals process requires submitting a formal petition within 60 days and may involve presenting evidence to dispute the assessment. If a taxpayer is facing aggressive collection actions, such as wage garnishments or bank levies, legal representation can help negotiate payment plans or explore options for reducing penalties.

In cases of suspected identity theft, a tax professional can guide individuals through securing their tax records and preventing fraudulent filings. Seeking assistance early can help avoid costly mistakes and ensure the issue is resolved efficiently.