The Correspondence Audit
The mail is how a correspondence audit is done. Corrections on tax returns are found by the IRS computers. If so, a notice is mailed to the taxpayer. This IRS notice shouldn't be dismissed. If you need to pay more taxes, act immediately. Interest and penalties may be added to the bill if there are delays. If you do not agree with the notice, mail your reply and attach documentation to support your case. You should have copies of the correspondence.
Face-to-face Audit
You know you have an impending face-to-face audit if you get a notice specifying a date and time to meet with a tax auditor or revenue agent or requesting you to contact them for an appointment.
What must be done?
- Do not dismiss the notice. If you do not reply within thirty days, the IRS will take action. You might receive a bill next time.
- Read the notice and follow the directions. You'll be informed which items are under review and the information you will need to take with you to the audit.
- Organize your documents. It is your responsibility to prove that your tax return is accurate. If you go to the audit organized and prepared for the auditor�s queries, it will make the job easier for the auditor. Consider this a plus.
- Ask for copies of missing records because you need supporting documents to prove your case.
- Don't take information not required to the audit. If information that was not required is brought up, tell the auditor that it isn't on hand.
- Be calm and polite in the audit.
- Only copies must be given to the auditor, not the original documents.
- Try to answer inquiries with either "yes" and "no." Small talk may lead you to divulge sensitive information. The auditor will have cause to believe that you have not reported all your income on your tax return when you speak about big purchases or vacations. This could tell him that he has to expand the audit.
- Know that you have a right to an appeal if you do not agree with the audit's outcome.
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