If your address is outside the United States, you have 150 days. IRS audit letters are not just random pieces of Bookkeeping for Etsy Sellers mail that show up to make your life difficult. They’ve carefully formulated communications that stem from a well-defined process. Your response to an audit letter can greatly affect your financial health.
- This is a legal notice the IRS is proposing an additional deficiency (balance due).
- Additionally, it may assess your return for additional tax, penalties, and interest.
- After the audit, the IRS will send a report with their conclusions.
- An IRS audit letter arrives in your mailbox in an official IRS audit letter envelope.
- Mike Habib, EA is a federally licensed Enrolled Agent with over 20 years of experience in IRS and State tax problem resolution, tax preparation, and tax planning.
Working with the IRS during the Audit Process
Certified letters establish a verifiable record of communication, provide proof of mailing, and help ensure accurate documentation and proper handling of tax matters. After reading the letter, gather the necessary records and supporting documents the IRS has requested, such as receipts, invoices, or bank statements. Typically, the IRS selects some tax returns for additional review to determine if they are accurately reported. The taxpayers whose returns have been selected receive audit letters informing them of the review process. Another reason for an IRS letter is they need more information from you. The IRS might need more details to understand your tax situation better.
Where Do IRS Audit Letters Come From?
Use different folders for different types of records and label them clearly. You might also want to make digital copies for easy sharing and backup. Being organized shows that you are thorough and can also help quicken the audit process. At Best Tax Pro, we simplify the audit process for you, helping you understand what each type of IRS audit means and how to respond. Understanding an IRS audit letter doesn’t have to be difficult. While it may seem unnerving at first, knowing what to expect can change how you react.
Why am I being selected for an audit?
When you use Taxfyle, you’re guaranteed an unearned revenue affordable, licensed Professional. Finding an accountant to manage your bookkeeping and file taxes is a big decision. Every IRS audit is different and the documentation you need to send is different for each one as well. It is common for the IRS to flag business deductions taken by small business owners and sole proprietors on Schedule C. It will then state the main reason for the audit and describe what documentation you need to gather to resolve the matter.
Potential Additional Taxes Owed
There is no format for submitting the response letter to the IRS. Your audit response letter can be a simple cover letter with attachments is fine. It is advisable to include the IRS audit notice as the first attachment you send to the IRS with your audit response letter. Your letter should also list each document that is being provided to the IRS auditor. This will help create a record of what is being provided to the IRS. You should also irs audit include your contact information in your response.
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