IRS Tax Tip: Audits by Mail

The IRS conducts many types of audits each year in an effort to verify income and expenses claimed on tax returns, many of which are conducted by mail. IRS.gov lists a number of tips to help taxpayers navigate the appropriate steps to take when in receipt of a letter notifying them of an audit by mail, we have summarized them for you below.

First, always be sure to read the letter carefully and completely. The letter is the best source of information involved and the type of information that the IRS is requesting you to send them. The IRS may request an itemized list of deductions or expenses. If you are unable to verify an amount claimed, respond with an explanation of the issue and your rationale for reporting the amount listed on your tax return. Once you have collected all of the requested information, you should attach copies of your documents to the audit letter and utilize the included envelope to return the information back to the IRS.

Second, it is important not to send original documents and you should always good practice to retain copies of everything you send in your response. You may also fax your information back to the IRS, if you choose utilize this option, you should include your name and social security number on each page to ensure all pages are associated with your case file.

Third, documents must be returned to the IRS within 30-days. If you are unable to meet this deadline you should call the number on the letter to discuss your situation and request additional time.

Fourth, once the IRS receives your information, they will thoroughly review it. Upon completion of their review, you will receive a letter either accepting your information or proposing changes to your tax return. If changes are proposed, 2 forms will be included with the return letter.

  • Form 4549 is the Income Tax Examination Changes form, this form explains the proposed changes to your tax return.
  • Form 886-A is the Explanation of Items form which describes specific changes and the reasoning behind them.

If you agree with the proposed changes, Form 4549 should be signed and dated and returned in the provided envelope along with your payment. If you disagree with the proposed changes, you do have the right to appeal within the IRS and before the courts, an explanation on this appeals process is also included in the letter.

Publication 3498-A The Examination Process (Audits by Mail) is available on the IRS website, this publication tells you what you need to do and explains your responsibilities and rights during and after an audit. The IRS website also contains information with steps on what to do if you owe additional taxes like paying your tax bill or applying for an online payment plan. If you pay your bill in full, you will reduce the amount of interest and penalties you will owe.

You can always contact McCauley Law Offices to discuss any concerns you may have. When the IRS comes knocking, let us answer. Contact us today for a free consultation, we’ll get the IRS off of your back.

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