The fact that you’ve received a notice from the IRS doesn’t automatically mean that you’re being audited. There are many different IRS notices and letters such as an office or field audit notice, a correspondence audit notice, and a Service Center Automated Adjustment Notice. It’s important to know and identify exactly what kind of notice you’ve received from the IRS. For example, receiving a notice for a Correspondence Audit means that your IRS audit will be done through the mail. Likewise, receipt of a Service Center Automated Adjustment Notice means that while you’re not really being audited, the IRS is expecting you to pay them money.
If you have questions about your audit call the Law Office of Jin Kim at (916) 299-9913 for a free consultation.
Notice of Audit
This notice merely informs you that you’ve been selected for an audit. Once you receive a notice by mail that you’re being audited, you will be informed in the same notice of the details regarding your audit. Such details may include but are not limited to: the type of audit you’ll undergo, the tax returns for which you’re being audited, and the documents which you’ll be required to bring (if you’re up for an office audit). Oftentimes, a number for your auditor will also be provided so that you’ll be able to call them if you have questions.
Seriously, Call A Tax Attorney
Before the different types of audits are described in detail, it can’t be emphasized enough that the first action after receiving notice of an audit is to seek legal advice from a tax attorney. Before you speak with the IRS, provide documents, or otherwise take action that could jeopardize your legal interests, call a tax attorney.
It’s said that correspondence audits are the most common type of audit performed by the IRS, accounting for more than seventy percent of the audits performed every year. Correspondence is the most straightforward of the three types of audits and the least work-intensive. Correspondence audits are usually used to verify relatively simple information by the IRS. For example, you might be asked to send documents proving a sale that was reflected on your tax returns. If you’re asked to send documents, professionals recommend sending photocopies instead of originals. There’s a chance that the IRS might misplace these with the amount of paperwork they receive; and in any case, you should not expect the IRS to return the documents you send.
In the event that you have questions regarding your correspondence audit, you can find the number of your correspondence auditor in the notice sent to you. Alternatively, you can write back to the IRS and ask them to have someone call you instead. It’s always better to ask a tax attorney if you’re confused about something. In the event that the correspondence auditor rejects the documents you sent or doesn’t believe the explanation you’ve provided, you can ask for your correspondence audit to be converted to an office audit instead. There are two possible results to this. One is that your request will be granted and you’ll get to present your case face to face with an auditor, or your audit will be closed without any further adjustments being made. The latter happens more often than you think.
Service Center Automated Adjustment Notices
Sometimes the notice that you receive from the IRS isn’t about an audit at all – but actually a Service Center Automated Adjustment Notice. This kind of notice is sent when the IRS notices that some information doesn’t line up with your tax returns and subsequently ‘corrects’ it. An example is when you state that you have five dependents but inadvertently write only four names. The IRS assumes that there are only five and adjusts your tax return for the incorrect information. These don’t really constitute an audit per se, so it means that you can still be audited even after you’ve already received a service center automated adjustment notice. There are four kinds of automated notices that you might receive:
- Error Correction Notices
- Penalty Assessment Notices
- Interest Assessment Notices
- Underreporter Notices
When you receive an automated notice, you’ll be asked to explain the discrepancy along with a proposed additional amount to pay if you can’t explain it.