For many Americans, the thought of an IRS audit is synonymous with fear and panic. Whether you suspect that information on your tax returns may stick out as unusual to the IRS, or if you have legitimate reasons to be concerned due to understated income or overstated deductions, often times the fear of the unknown can be worse (or nearly as bad) as the audit itself. Therefore, one of the first steps to alleviate this fear is to simply answer the question of whether or not you are actually facing an IRS audit. If you are, here is how you will know.
IRS Audit Letters
If the IRS decides to audit, or “examine” a taxpayer’s return, that taxpayer will receive written notification from the IRS. The IRS sends written notification to the taxpayer’s or business’s last known address of record. Alternatively, IRS correspondence may be sent to the taxpayer’s tax preparer. Letters sent by the IRS will explain the reason for the correspondence and provide instructions to the taxpayer. There are numerous different types of IRS Audit Letters and a qualified tax lawyer can certainly help you clearly identify your problem and explain your options.
Notice of Audit and Examination Scheduled
The Notice of Audit and Examination Scheduled is by far the most common IRS audit letter that a taxpayer can receive. It tells the taxpayer that he or she is being audited by the IRS. This letter will also include information regarding which items on the taxpayer’s tax return require review, and will specify which records the IRS wishes the taxpayer to provide. These letters typically require some immediate action on the part of the taxpayer being audited, including a deadline to submit materials and documentation to the IRS. The Notice of Audit and Examination Scheduled can range in length from one page to several pages, depending on the type of information requested.
General 30 Day Audit Notice
The IRS General 30 Day Letter is sent to the taxpayer after the completion of the audit. This letter contains a description of the proposed changes to the taxpayer’s tax return and generally contains a form called “proposed Adjustment/Changes to your Tax Return,” which is the auditor’s reports or findings. If the taxpayer agrees with the proposed changes, he or she can sign the agreement form. If the taxpayer does not agree with the proposed changes, the taxpayer can file a tax appeal or protest with the IRS office that handled the audit.
Notice of Deficiency: The 90-day Letter
The Notice of Deficiency letter tells the taxpayer that he or she has unpaid taxes for the tax year (or years) identified in the letter. Upon receipt of this letter, the taxpayer can either pay the amount assessed or file a petition with the tax court within 90 days. This letter is urgent and requires immediate attention because the IRS does not grant extensions beyond 90-days.
Request for Consideration of Additional Findings
The Request for Consideration of Additional Findings is a letter accompanying the report that makes detailed adjustments to the taxpayer’s tax return. If the taxpayer agrees to the adjustments proposed by the IRS, he or she can sign the agreement and return it to the IRS. On the other hand, if the taxpayer does not agree with the proposed changes, he or she must file an appeal or protest within 15 days of the date he or she received the letter. It is highly recommended that you seek the help of an experienced tax attorney when engaging the IRS in this way to avoid triggering an unintentional expansion of the audit into additional tax years or types of tax.
Does the IRS Ever Contact a Taxpayer through Email?
No. The IRS never contacts taxpayers through email in order to initiate an audit. Due to certain disclosure requirements, the IRS will contact the taxpayer to notify regarding selection for an audit solely through mail or telephone.
When Does A Tax Attorney Become Necessary?
In an audit, the IRS is essentially a prosecuting attorney and you are the defendant. It can be very difficult for anyone who is not experienced in dealing with IRS audits to ascertain whether or not a question or piece of information could potentially be damaging to your case or trigger an expansion of the IRS audit. Therefore, it is recommended that you seek the counsel of a qualified tax attorney if you are being audited by the IRS. The Tax Lawyer - William D Hartsock offers a free phone consultation with the benefit of attorney client privilege. If your case is very simple and straightforward, no further legal assistance may be needed. However, if your case could potentially lead to larger problems, you may be able to avoid making early mistakes. For your free consultation contact The Tax Attorney - William D Hartsock, Tax Attorney Inc. at (858)481-4844.