A correspondence audit occurs when the IRS examines a taxpayer’s return via mail or telephone. In this case, the IRS requests the taxpayer to furnish additional information or documentation to substantiate their tax return. It is crucial for taxpayers to promptly and accurately respond to correspondence audits in order to prevent penalties or subsequent audits.
A correspondence audit is an audit conducted by the IRS through mail or telephone. The purpose of this audit is for the IRS to request additional information or clarification on certain items on a taxpayer’s tax return. This can be done through written correspondence or phone calls. For instance, if a taxpayer claims a deduction for charitable donations, the IRS may ask for documentation like receipts or cancelled checks to verify the deduction. The taxpayer can respond to the request by mail or phone, and the IRS will review the provided information to determine the validity of the deduction. Correspondence audits are less intrusive compared to other types of audits, such as field audits that are conducted in person at the taxpayer’s business premises or lawyer’s offices. Nonetheless, it is crucial for taxpayers to promptly and accurately respond to the IRS’s information requests to avoid potential penalties or further scrutiny.
A correspondence audit is an audit conducted by the Internal Revenue Service (IRS) through mail correspondence. It is a less formal type of audit compared to an in-person audit.
A correspondence audit typically begins when the IRS sends a letter to the taxpayer requesting additional information or clarification regarding certain items on their tax return.
Common triggers for a correspondence audit include discrepancies in reported income, deductions, or credits, failure to report certain income, or claiming excessive deductions.
It is important to carefully read the letter and understand the specific issues the IRS is questioning. You should gather all relevant documents and respond to the IRS within the given timeframe, providing the requested information or explanations.
While it is possible to handle a correspondence audit on your own, seeking professional assistance from a tax attorney or certified public accountant (CPA) can be beneficial, especially if you are unsure about how to respond or if the issues are complex.
Failure to respond to a correspondence audit letter can result in the IRS making adjustments to your tax return based on the information available to them. This may lead to additional taxes, penalties, and interest being assessed.
Yes, if you disagree with the outcome of a correspondence audit, you have the right to appeal. The IRS will provide instructions on how to initiate the appeals process in the letter detailing the audit results.
The duration of a correspondence audit can vary depending on the complexity of the issues being examined and the responsiveness of the taxpayer. Generally, it can take several weeks to several months to resolve a correspondence audit.
While a correspondence audit is typically limited to specific issues on your tax return, it is possible for the IRS to expand the audit into a full-scale examination if they uncover significant discrepancies or suspect fraud.
During a correspondence audit, you have the right to be treated fairly and professionally by the IRS. You also have the right to representation, the right to appeal, and the right to confidentiality of your tax information.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 17th April 2024.
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