Understanding the IRS Correspondence and Office Audit

If you’ve received a notification from IRS regarding an office audit or a correspondence audit, following information will make you aware about what to expect during these audits.

In case, the letter you’ve received states that you’d need face an office audit, it means meeting will take place at the IRS office. The role of Tax auditors usually played by less experienced IRS employees to carry out office audit. These kinds of audits mostly deal with simple tax matters and few simple items related to your tax return will work. However, office audits contain more complexities than a correspondence audit. In most of the office audits, you just need to represent common items such as entertainment and travel expenses, exemptions and casualty losses.

The letter sent by IRS for an office audit will include request to bring in the documents such IRS relief form supporting the tax items on your return. Depending on the documentation required by the IRS, you can gather all necessary documents and send through mail. You don’t have to worry about, if items on your return are legitimate. If this is not the case, get ready to pay!

The correspondence audit is one of the simplest IRS audits. In these audits, IRS sends a letter to taxpayer requesting a proof of a particular exemption or deduction. You can complete the request either by sending photocopies of required financial records or by completing a special form. To handle the correspondence audits, first thing that you need to refrain from is “Panic!” Auditing is regular procedure followed by IRS to check the authenticity of the taxpayers and this time you’re the lucky one. Before getting panic, read the letter thoroughly and check what information is required by the IRS. IF you’ve received letter from IRS for correspondence audit, you should be thankful to IRS because these audits are the least threatening.

Process of correspondence audit starts with a notice from IRS stating that tax return has been changed for the taxpayer. IRS service center conducts majority of audits. Whenever you receive a letter, neither ignore it nor send the check immediately. Checking the bill along with the letter should at top of your priority list. In most cases the calculation made by IRS is incorrect. Compare your copy of tax return with the notice sent by IRS in order to get the clear picture of what information IRS is exactly looking for.

If you’re thinking of ignoring the letter; don’t! If IRS does not receive response from your side, you will come under the category of lack of response and you’d need to clear the assessment of additional taxes as well. In case, you could not pay the additional taxes, interest and penalties will increase your payable amount. If you do not agree with the IRS audit notice, don’t ignore it as you can appeal it. You can get detailed procedure of appealing in the letter. IRS provides 30 days to response. In these 30 days, you can prepare yourself for the audit by gathering relevant documents.