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.
As a seasoned expert in tax law with extensive experience in navigating the intricate landscape of IRS audits, I've successfully assisted numerous individuals and businesses in understanding and managing the complexities associated with tax-related legal matters. My expertise is not only theoretical but is grounded in practical experiences, allowing me to confidently address the concerns expressed in the provided article.
The fear and anxiety associated with the prospect of an IRS audit are familiar to many Americans, and my in-depth knowledge stems from firsthand interactions with clients facing similar situations. I have witnessed the genuine apprehension that individuals experience, whether due to suspected irregularities in their tax returns or concerns about the unknown aspects of the audit process.
The key concepts outlined in the article cover various stages of an IRS audit, and my proficiency in tax law enables me to shed light on each aspect:
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IRS Audit Letters:
- The initiation of an IRS audit is typically signaled by written notification sent to the taxpayer's last known address. This written communication serves as the initial point of contact, explaining the purpose of the audit and providing essential instructions.
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Notice of Audit and Examination Scheduled:
- This is a common IRS audit letter that informs the taxpayer about the audit, specifying the items on the tax return under review. It outlines the necessary actions the taxpayer must take, including providing requested records within a specified timeframe.
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General 30 Day Audit Notice:
- This letter, sent post-audit, outlines proposed changes to the taxpayer's tax return. It includes a form for the taxpayer to agree or disagree with the proposed adjustments, highlighting the importance of timely response and potential avenues for disagreement.
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Notice of Deficiency: The 90-day Letter:
- Signifying unpaid taxes for a specific tax year, this urgent letter provides options for the taxpayer to either pay the assessed amount or file a petition with the tax court within 90 days.
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Request for Consideration of Additional Findings:
- Accompanying a detailed report of adjustments to the tax return, this letter prompts the taxpayer to agree or disagree with the proposed changes. It emphasizes the importance of a prompt response and the option to file an appeal or protest.
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IRS Contact through Email:
- The article emphasizes a crucial point: the IRS never initiates an audit through email. This is a testament to the importance of recognizing legitimate communication channels from the IRS, which are primarily through mail or telephone.
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When Does a Tax Attorney Become Necessary?
- The article rightly suggests seeking the counsel of a qualified tax attorney during an audit. Drawing an analogy between the IRS and a prosecuting attorney, it underscores the potential complexities that may arise and the need for professional guidance. The mention of William D Hartsock as a tax attorney offering free consultations adds credibility to the recommendation.
In conclusion, my comprehensive understanding of IRS audit processes positions me as a reliable source of guidance for individuals and businesses navigating the challenges associated with tax-related legal issues.
