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Understanding the IRS Correspondence and Office Audit

Travis Cole

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Received notification of a correspondence or office audit? Read below to know what to expect!

The Correspondence Audit

The correspondence audit is the simplest type of IRS audit. During this audit, the IRS sends the taxpayer (via mail) a request for proof of a particular deduction or exemption taken by either completing a special form or sending photocopies of relevant financial records. On a positive note, the taxpayer has the greatest chance of coming out on top during a correspondence audit.

If you find yourself in the middle of a correspondence audit, please don't panic. You should know that the IRS conducts hundreds of thousands of correspondence audits every year. This type of audit is the least threatening IRS tax audit for the taxpayer. . . something you should keep in mind before you have a panic attack when you receive that letter in the mail.

This correspondence audit process generally begins when a taxpayer receives a notice from the IRS that the taxpayer's tax return has been changed. Most correspondence audits are going to be conducted through the IRS service center where the tax return was filed.

When you receive this letter in the mail, do not immediately send a check to the IRS and do not simply ignore the correspondence audit letter as if you never received it. I mention this because these are two mistakes often made during a correspondence audit. Just because the letter comes from the IRS does not necessarily mean that they are correct in their findings. Everyone can make mistakes, even the IRS. Only after you have conducted a thorough review, comparing a copy of your tax return with the IRS notice, can you be certain that the IRS is either correct or incorrect.

As far as ignoring the correspondence audit. . . . yeah, bad idea. Ignoring an IRS notice will not make the problem go away. If you do not respond to the IRS notice or IRS correspondence audit letter, the IRS treats the lack of response as an agreement with its computations and you will be assessed the additional taxes owed. Failure to pay the additional taxes will result in penalties and interest against you.

If you do happen to disagree with the IRS correspondence audit notice, you have the option to appeal it. This procedure is explained in the notice you receive from the IRS. In most circumstances, your written explanation must be sent to the IRS within thirty days of the date of the IRS notice. Your response should include copies of any tax documents that will support your appeal.

All in all, a correspondence audit is not a big deal. If you receive that notice in the mail, take a deep breath and calmly address the situation. As mentioned before, you might end up owing a little more on your end or you might find that the IRS has made a mistake and you own nothing. Trust me, things could be worse.

The IRS Office Audit

An IRS office audit takes place in an IRS office. Less experienced IRS employees (typically an IRS tax auditor) usually carry out this type of audit. Office audits are mostly concerned with simple tax matters and can be limited to a few simple items on your tax return.

Now do not be fooled. IRS office audits are more complex than IRS correspondence audits, but are not complex enough to require a Field IRS Audit. Most IRS office audits concern common items found on tax returns, such as exemptions, travel and entertainment expenses and casualty losses.

If you find yourself the subject of an IRS office audit, you will receive a letter (sometimes referred to as an “appointment letter") requesting you to bring in documentation supporting the tax items on your tax returns that are in question. Depending on just how much documentation the IRS is requesting, you might be able to send necessary documents through the mail. Obviously if you can handle the matter this way, I would. If this option is not afforded to you, suck it up and bring to the appointment all tax documents that the IRS tax auditor requested. If the items on your tax return are legit and you can back that information up, you obviously have nothing to worry about. Now if that's not the case. . .be ready to pay up.

In either case, if you feel like you need assistance, seek a professional to represent you in the matter. Or, consult my blog, TaxFacts4U , for more information.

Travis B. Cole is a former Tax Consultant for Effectur Tax Resolution. However, he still stays current on tax matters and co-authors a blog, TaxFacts4U., outlining new tax advice and tax policy each week.


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