Audits are nothing new. Taxpayers may find themselves in the unfortunate situation of opening their mailboxes to an IRS examination letter. The IRS Letter 6316 (“Letter 6316”) is one such letter. The IRS issues these particular letters as part of its National Research Program, and the IRS is certainly issuing them—I have spoken with multiple taxpayers who have received such letters in the last few months alone. Taxpayers must pay attention to these letters, as well as others, and understand their rights and responsibilities with respect to each. Our firm has previously described other IRS notices/letters: You Received an IRS CP518 Notice, Now What?; You Received an IRS CP504 Notice, Now What?; You Received an IRS CP15 Notice (re: Form 3520 Penalty), What Now?; You Received an IRS LT11 Notice (or Letter 1058), Now What?; and You Received an IRS Notice CP2000, Now What?. This article discusses the Letter 6316 and how a taxpayer should respond.
What is the Letter 6316?
Generally, a taxpayer receives the Letter 6316 from the IRS as part of the IRS’s National Research Program (“NRP”). The IRS letter’s first line states as much: “We’ve selected your federal income tax return for the tax period shown above for a compliance research examination.” Despite many taxpayers’ initial thoughts, the IRS examination letter is not necessarily spurred by errors or issues on the taxpayers’ federal income tax return(s).
According to the IRS, the IRS needs reliable compliance estimates to determine which key areas of noncompliance to address and which treatments to apply to maximize the use of its limited resources.[1] Consequently, data provided by NRP examinations give the IRS the information to meet these needs.[2]
The IRS expounds on NPR examinations in Notice 1332:
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