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What To Do When You Receive An Audit Letter



Summer is typically when the IRS sends out notices and audit letters, so if you’ve received one, remember, first and foremost, don’t freak out.

Don’t panic!

After all, it’s just a piece of paper sent to you from the IRS. While the IRS can be scary, if you are a law-abiding taxpayer, I assure you even if you end up getting audited it’s not as scary as it seems.

There are several things to know about who gets audited. If your income is between $25,000 and $100,000 per year, your chances of getting audited are pretty slim unless you or your tax preparer made glaring errors on your tax return. However, don’t think that just because your income is less than $25,000 that your odds of getting audited are lower. In fact, they are higher. This is because many taxpayers in this bracket claim the earned income tax credit and the IRS conducts many audits to ensure that the credit is not being claimed fraudulently.

So, here you go, a quick checklist of how to survive your IRS audit letter:

First: Don’t Panic

Take a deep breath. Getting hysterical and angry might seem to be a rational response to upsetting news, but it really isn’t rational at all. As I mentioned in the beginning, an audit doesn’t mean you’ve done anything wrong. It simply means the IRS wants to take a deeper look into your taxable income and assets.

Second: You’re Normal

If you can’t actually make sense of the letter, don’t worry you’re not alone. Not being able to make sense of the letter is normal for anyone but tax attorneys and the people who write the letters. In fact, unclear letters from the IRS are the status quo (there was even a study about this phenomenon).

Third: Don’t Ignore the Letter

Even though the IRS is not excellent at communicating clearly, they are good about following up on their audits. So, take a moment to clear your mind. Don’t cancel any plans or let this letter interfere with your life in any way. Simply go about your life and take constructive action in the normal course of events.

Fourth: Gather Documentation

The first action step, if you understand which parts of your tax return are under audit, is to start gathering relevant information. Receipts and online banking statements really help here.

Pro Tip: Keep all tax return documentation for three years – you never know when they’re going to come in handy!

Fifth: Ask for Help

The second action step is to reach out for help. An IRS audit is not something to be taken lightly – and it’s not something you want to or should do alone. Call us today and we can go over your options ASAP. We help our clients through IRS audits and other confusing IRS issues as smoothly as possible. So, don’t lose a moment’s sleep and don’t worry, we’ll help you understand what the IRS is looking for and help you through the process.

Barry Fowler is licensed to represent taxpayers before the Internal Revenue Service (IRS) and is a longstanding member of several tax industry professional organizations including the National Association of Enrolled Agents (NAEA), National Association of Tax Preparers (NATP), Texas Society of Enrolled Agents (TSEA), and the American Society of Tax Problem Solvers (ASTPS). With experience in the tax and finance industry spanning over twenty years, Fowler’s expertise includes tax resolution, personal financial planning, tax return preparation, financial statements, and general ledger bookkeeping. He has been instrumental in helping hundreds of people resolve complex tax issues with the IRS.

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