How can I ensure compliance with the IRS if I receive a notice or audit request?
Best Practices for Responding to an IRS Notice or Audit Request
1. Understand the IRS Audit Process
- An IRS audit is a review of an organization's or individual's financial records to ensure tax laws are followed correctly.
- Audits can be conducted by mail or in-person at an IRS office, taxpayer's home, place of business, or accountant's office.
- Familiarize yourself with the audit process detailed on the [IRS Audits page].
2. Respond Promptly and Accurately
- Do not ignore IRS notices. Promptly open, read, and understand the content.
- Respond to the IRS by the due date provided in the notice to avoid further issues.
3. Gather and Organize Your Documentation
- Collect all relevant records that pertain to the items being audited.
- Organize your documents to correspond with the items listed in the IRS notice.
- The IRS may request specific documents, which are listed on their [official website].
4. Submit Complete and Accurate Information
- Provide all the information requested by the IRS in the notice.
- Ensure the information is complete and accurate to the best of your knowledge.
5. Use Electronic Records When Applicable
- The IRS accepts some electronic records in lieu of or in addition to other types of records.
- Contact your auditor to determine acceptable electronic records.
6. Maintain Confidentiality and Security
- Follow the [Tax Information Security Guidelines] to protect sensitive tax information.
- Ensure that any electronic submissions are done securely.
7. Know Your Rights and Representation Options
- Taxpayers have the right to retain representation during an audit.
- Representation can be from an attorney, certified public accountant, enrolled agent, or tax professional.
- Low Income Taxpayer Clinics (LITCs) may provide free or low-cost assistance.
8. Use IRS Resources for Guidance
- The IRS provides resources such as the [Lifecycle of a Tax Return: Correspondence Audits] for understanding the audit process.
- Review the [Executing the Examination section] of the Internal Revenue Manual for detailed procedures.
9. Confirm Authenticity of IRS Contact
- The IRS usually contacts taxpayers through mail delivered by the United States Postal Service.
- In cases of phone calls or in-person visits, verify the identity of the IRS employee.
- Refer to the [How to know if it’s really the IRS] page for guidance on confirming IRS contact authenticity.
10. Keep Records of All Correspondence
- Retain copies of all documents submitted to the IRS and any correspondence received.
- Document all communications with the IRS, including phone calls and meetings.
11. Consider Professional Advice When Necessary
- While you have the right to represent yourself, complex tax issues may benefit from professional advice.
- Ensure any tax professional you engage is qualified and in good standing with the IRS.
12. Follow Up and Monitor Your IRS Account
- After responding, monitor your IRS account online to ensure your case is progressing.
- Follow up with the IRS if you do not receive timely acknowledgment of your submission.
By adhering to these best practices, you can ensure full compliance and effectively manage the IRS notice or audit request process.
Sources:
IRS Audits | Internal Revenue Service 2024-08-03
Lifecycle of a Tax Return: Correspondence Audits: Increased Increased Communication Alternatives Are in Progress 2024-08-03
Publication 1075 (Rev. 11-2021), Tax Information Security Guidelines | Internal Revenue Service 2024-08-03
IRS announces sweeping effort to restore fairness to tax system with Inflation Reduction Act funding 2024-08-02
Publication 3744 (Rev. 4-2023), Internal Revenue Service Inflation Reduction Act Strategic Operating Plan 2024-08-04
Catalog Number 16586R www.irs.gov | Internal Revenue Service 2024-08-02
Withholding Compliance Questions and Answers | Internal Revenue Service 2024-08-03
What to do if you receive an IRS balance due notice for taxes you have already paid 2024-08-02
4.46.4 Executing the Examination | Internal Revenue Service 2024-08-02
How to know if it’s really the IRS | Internal Revenue Service 2024-08-02
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Disclaimer: the information provided does not, and is not intended to, constitute legal advice. Generative AI systems can make mistakes. Verify all important information.
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