5 Things to Do After You Get an IRS Audit Letter in the Mail
- Author: Bryan Miller
- Posted: 2024-08-07
The IRS is running way behind when it comes to processing tax returns, However, this does not mean that the agency is not performing audits right now. While the rate of audit has slowed down in recent years, taxpayers may still be on the hook if the IRS finds that they did not follow the tax laws. This means that you still need to take an IRS audit very seriously. Here are five things that you should do if you receive an audit notice in the mail from the IRS.
Read the Letter Carefully
The IRS could be trying to subject you to any one of a number of different types of audits. Many audits are just conducted through letters and correspondence. The IRS would need to state the basis of their audit in their initial letter to you, so it is vital to understand what they are after. The IRS must send a targeted information request to you. Therefore, you should be entirely sure of the documents they want. You should never try to give the IRS more than they are looking for because it can only get you in trouble. Thus, you should read the letter several times before you consider responding in any way.
Remain Calm
Dealing with the IRS can be intimidating and scary for most taxpayers. You have likely heard horror stories, only some of them that are true. Nonetheless, most taxpayers will absolutely freak out when they see the letter with the IRS as the return address. It is important to take a deep breath and remain calm when you are dealing with the IRS. There may be financial consequences for you, but you can always work out a payment plan. Chances are that you are not going to jail. However, panicking can lead to your doing something dumb when talking to the IRS, so it is critical to gain control of your emotions.
Gather All of Your Documents
The most important thing that the IRS wants to see is the documentation of your taxes. That is what they will use to make a determination whether you owe them more money. It is critical to be organized when you are dealing with the IRS. They will expect to receive the full documentation that they have requested and might hold it against you if you do not have the receipts. Some of your financial documentation can take some time to assemble. Thus, it is critical for you to start this process early so you can give the IRS what they are asking for in a timely manner. If the audit is in person, you should take some time to physically organize your documents because it can make a better impression.
Talk to a Professional if Necessary
Sometimes, you may be in over your head when it comes to dealing with the IRS on your own. Some audit matter may be simple, and you can handle them with the IRS with a couple of letters of correspondence. However, you should recognize immediately if the matter is beyond your depth. If you think that a large amount of money may be involved or there are steep possible penalties, it may be better to approach this with an expert on your side. There are tax attorneys who help their clients deal with responding to IRS audits. They have experience in responding to these audit letters. You do not automatically need an attorney, but should recognize if the situation calls for one.
Respond to the Letter
The IRS is going to set a deadline for when you need to respond to the audit. Even if there is an in-person audit, you would likely need to correspond with the IRS before the date of the audit. It is important to make sure that you stick to whatever deadline the IRS sets. You might face additional penalties if you do not respond in a timely manner. When you do answer the IRS, it would likely be in writing. Take the time to read over your letter several times before sending it. Your first reaction may not always be the best one, and it is vital to strike the proper tone. Accordingly, make sure to proofread it and ensure that the letter does not come off sounding hostile. Be objective and present the facts and documents.
