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What to do when you receive an audit letter from the IRS?

Many taxpayers ask why they were chosen for an audit and what to do in this situation.

Effective communication is key to a successful correspondence audit.

Some taxpayers receive a CP2000 notice— an IRS letter that proposes an increase in tax due to 1) additional income not reported on the return or 2) the removal of a credit/deduction.  The CP 2000 notice is system-generated so never jump to the conclusion that the proposed tax adjustment is correct.  For example, the IRS may not know that you properly rolled-over your IRA  or that you had incurred expenses associated with an inadvertently excluded 1099- Misc form.

In scenarios like these, you must submit proper documentation to the IRS and adhere to all deadlines in order to prevent a tax increase. A well-written letter that advocates your tax position and provides organized documentation is imperative to reduce the proposed tax assessment.  If you need more time, call the phone number on the letter and ask the IRS to notate your account.  The agency will allow additional time for you to submit this information.

In addition to the tax, the IRS typically includes an accuracy-related penalty on these notices. For situations where mistakes were made, don’t be afraid to ask for penalty abatement.   However, you may have merit to ask for relief from this penalty.

If you do not effectively communicate with the IRS or you have a challenging case, you may receive a final notice of deficiency, forcing you to file a petition in the U.S. Tax Court or accept the proposed tax assessment.  (If you miss the tax court deadline, you may still have an option to contest your results through audit reconsideration; however, it is better for you not to get to this point.)

What to do if your return was selected for an audit and you are assigned to an Examiner?

As always, effective communication is essential from the start.

A first good step is to establish reasonable deadlines with the examiner when it comes to submitting the requested information.  If information is missing, then this must be properly explained.  Typically, most examiners are reasonable when it comes to the information submitted — while the taxpayer has the burden of proof for his/her position, they understand that the taxpayer may not have kept absolutely every single receipt.  That being said, if you are encountering difficulties with an examiner, don’t lose hope.  You have the option of going to appeals and it’s important to preserve your appeal rights.

Hiring a competent tax professional who can navigate the procedural process at the IRS and effectively advocate on your behalf is crucial to the success of your case.  A skilled tax professional should review your return and evaluate its weaknesses and strengths.  (For example, perhaps you were entitled to a deduction or credit that you did not take.) For more information, please contact our office at 1-800-777-3800 or here at our contact page:

Frequently Asked Questions

Is it worth it to take my case to appeals to contest an audit or collection alternative?

Yes.  Appeals is the best place to obtain a settlement with the IRS.  Appeals will weigh the hazards of litigation and is most likely to settle or agree with you if you have merit.

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Start Today with an In-Depth Consultation:

Our Team of Highly Trained Tax Professionals is waiting to assist you. Call us now for immediate relief at 1-800-777-3800 or click the button below to contact us electronically & a tax professional will be with you shortly.

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