It’s a moment every person dreads. You pick up the mail and there is an
envelope from the IRS. It’s not a refund check. What do you do?
Don’t Panic
Each year, the IRS sends out millions of “correspondence audits” to
taxpayers to request payment of taxes, notify them of a change to their
account or request additional information. These audits normally cover
a very specific issue, often notifying you of additional small amounts
of income for which you owe tax. Each letter and notice provides
specific instructions explaining what you should do if action is
necessary to satisfy the inquiry.
Most correspondence can be handled without calling or visiting the IRS.
You simply follow the instructions in the letter and the matter is put
to rest. Alternatively, you can contact the IRS to contest the matter.
Simply call the telephone number indicated on the letter or write an
explanation as to why you disagree. Make sure to include copies of any
supporting documentation you want considered by the IRS. Typically, it
will take the IRS between one and two months to respond. During the
first quarter of the year, it can take two to three months.
Sometimes, the IRS sends a second letter or notice requesting
additional information or providing additional information to you. Be
sure to keep copies of any correspondence with your records. The IRS
has been known to lose track of actions involving a taxpayer’s account.
Worse Case Scenario
Everybody has a few really bad days in his or her life. You know, the
car breaks down, you spill coffee on your shirt while driving to
work…you get notice of a full blown audit from the IRS. The first step
you take should not be drinking to excess or driving for the border.
You have rights when the IRS comes calling and one of them is
particularly important.
Representation
You have the right to be represented by an accountant or attorney at
your audit. Under no conditions should you even consider going to an
audit by yourself. Doing so would be like throwing red meat to a lion.
Instead, spend the money to get representation and let them handle the
audit. In most cases, you won’t even have to go to the audit.
Nightmarish tax audits are generally a thing of the past. A letter from
the IRS should not cause you to faint. Usually, the news isn’t that
bad. If it is, hire representation and let them handle it.
