You Received an IRS Audit Letter… Now What?

Jack Prot

Most people have experienced the fear and drudgery of receiving an IRS audit letter. The shock typically wears off within a day or even a week. Although highly unlikely, there’s a fear that the IRS may even be waiting around the block and waiting to put you in jail. Funny to say, but a real feeling though to many.

We all for the most part do not intentionally look to defraud the government on our tax returns by not reporting income earned or lying about deductions that either never occurred or we don’t have proof of. Even if you tried to do these things, the IRS system is efficient enough to uncover this fraud and penalize you for it whether you believe it or not. It just pays in the long run to do right and file an accurate return even if you owe a balance and don’t have the money to pay off the total amount owed.

Ever so often in spite of filing an accurate tax return, you still may receive an IRS audit letter. What do you do? Not open the letter and pretend like you never received it? Open the letter and yell at it because you believe you’re a victim of the system? Or do you attempt to respond even though you have no idea what the letter is saying? We’re going to share with you two simple ways to deal with an IRS audit letter so that you can have peace of mind and more importantly a solid plan to solve this problem.

Open the Letter and Read It
Simple… yes, but you’d be surprised how often this doesn’t happen. Why you ask? Fear more than anything. Whenever you get mail from the IRS, you think… oh, wait a minute, this can’t be anything good which may be true. But, this does not disregard the fact that you must open the envelope and read the letter. At the minimum, you must understand that the IRS works on a schedule and each letter has a time clock attached to it. You only have so much time remaining to respond before the IRS decides to take matters into its own hands. And you definitely don’t want the IRS to handle its business. So, how do you overcome this fear of opening the letter? Take a deep breath and know that your world won’t stop or end once you open it up. In the case of being bad news, move on to the next step below.

Will You Handle It or Will You Pay Someone to Handle It
After opening and reading the letter, you need to be honest with yourself. Do you truly understand what the letter is saying and what the IRS is asking for, if anything? Most if not all IRS letters even the audit specific ones have their own language and tone. Unless you’re logical and stoic when it comes to matters of the tax code (not saying anything here about your level of intelligence or common sense) to a certain degree then you’ll have a hard time wrapping your thoughts around the structure and content of it. IRS language can most times come off as sounding like a robot wrote it. If the matter is tax related in terms of your tax return, then I’d recommend you find a competent tax consultant to review and give you a summary of its contents. A solid tax consultant will charge a minimal fee for this (no more than $50) and not only give you a summary, but also give an option or two to solve the issue. Don’t waste your time trying to fix something you don’t understand. Invest the minimal fee and find a tax consultant to help you.

These IRS audit letters can be scary and down right nasty. But, if you keep your cool and team up with a competent tax consultant, then you will have put yourself in a position of control and confidence.

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