Audit Letters From the IRS

By: Rich Chappo

Picking up the mail each day should not be hazardous to your health. That being said, there are a few letters you can receive which can raise your blood pressure. Getting one from the IRS that does not contain forms is surely the stuff of the end of the world.

Most mail from the IRS is thick. Whether you realize it or not, we are all conditioned to not freak out when such a letter comes. It is forms and we inherently know this. Ah, but what if you get a thin letter. This one is different and different means bad news.

A thin letter from the IRS usually contains something known as a notice statement. A notice statement is issued for one reason only. The reason is the IRS has determined there is something fishy with your taxes. Okay, now you can panic.

Now, it can be said in truth that the ubiquitous notice sometimes is a good thing. The problem can be that you paid too much money. I had this happen once. Eighteen dollars. This is, however, admittedly a rare event and the news usually is not positive.

The bad news is you are probably being audited if you receive this letter. Go ahead, cry. Let it out. Once you are done, actually read the full letter. The audit may not be the torturous event you are imagining. In fact, it rarely is.

For the majority of people, the indication you are being audited is not the foreshadowing of a rough time you might expect. Instead, you stand a good chance of receiving what is called a correspondence audit. Yep, you get to deal with everything by letter.

The real beauty of these mail audits is their simplicity. The letter will detail what the agency is contesting. It will also provide a potential solution for you. The solution may not even involve you paying more tax, but it probably will.

Once you receive the letter, the burden is on you. You are usually allowed to do nothing if you agree with the proposal of the agency. If you want to fight it, you have 30 days to send a letter saying as much and why.

If you accept the proposed changes, the audit is over as long as you take any required action such as sending in more money. If you want to fight the agency, you can. Understand, however, you might be opening yourself up to a full audit.

The IRS issues millions of notices to taxpayers each year. A huge percentage are resolved without blowing up into a bigger audit. If yours does, make sure to get professional help. Tax attorneys offer the best prospect of getting the IRS to back off.

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