Responding to an IRS Notice
If you have received a notice from the Internal Revenue Service, you should consider consulting with a tax professional prior to responding. An experienced CPA or attorney can help you review the IRS notice and help you determine the best way to respond while protecting your rights as a taxpayer.
The IRS does not communicate via email, so an official IRS notice will be mailed to you. You will need to respond within a stated time period. In many cases, additional financial penalties will apply if you fail to reply.
A tax professional or tax attorney may be able to negotiate on your behalf. Use our education and extensive experience in tax preparation and tax law to your advantage. Why be frustrated and muddle through correspondence and meetings with the IRS? Call tax professional Jo Ann Koontz for assistance.
Internal Revenue Service Audits and Appeals
The Internal Revenue Service may send you a notice of intent to audit your tax returns. The purpose of a tax audit is to verify that the income and expenses you reported on your tax return are correct. Often, when the IRS selects your return for an audit it is because a variation has been statistically identified based upon the numbers you provided.
The IRS uses many different factors when selecting which returns to audit. The majority of tax audits are selected by computers. The IRS uses several different formulas to analyze returns and perform statistical analysis to score tax returns based on their likelihood of being correct.
Being selected does not necessarily mean there is a problem; sometimes you may actually be due a refund after the audit, or the IRS may accept your tax return as filed.
Once the IRS determines that it would like to obtain more information about your tax return, they will send a letter stating that your return has been selected for an audit. Here are three different audit methods used by the IRS.
- Correspondence Audit: This is the most common type of audit and is handled entirely by mail. The IRS will normally request specific documentation to support particular items on the tax return.
- Field Audit: This is when the IRS wants to come to your home, place of business, or your tax preparer’s office to perform the audit.
- Office Audit: This is when you are required to go to an IRS office to meet with an IRS auditor. The IRS examiner will determine the time and the particular documents required to be submitted for support.
After the audit, you will receive an IRS examination report that will show the proposed changes to your tax. The report will provide a clear explanation of any adjustments made. It will state that you have no changes; you are due a refund; or that changes have been made and you owe more tax plus interest and penalties assessed.
Once you receive the IRS examination report, you have two options: You can approve their findings, or you can choose to disagree with their findings. If you disagree, you have 30 days to do the following:
- Mail in additional documents you would like them to consider,
- Request a discussion of the findings with the examiner (you can do this and submit additional information to be considered).
- Discuss your case with the group manager or senior manager
- Request an appeal
If you do not respond within 30 days then the IRS will send a notice that your case is considered not agreed and you will have only 30 more days to file for an appeal or the IRS findings will become final.
- Bringing Taxpayers into Compliance
- Wage Garnishment and Tax Levy
- Offer in Compromise IRS Payment
- Unfiled Tax Returns
- Currently Not Collectible Status
- Paying the IRS with an Installment Agreement
- Child Deductions and Dependent Deductions
- Tax Lien and Lien Releases
- Penalty Abatement May Reduce or Eliminate IRS Debt
- Caught in Your Ex-Spouse's Tax Liability? Apply for Innocent Spouse Relief