If you have recently received IRS Form 4564 in the mail, then you need to take action ASAP. This formal tax document was sent to you because you’re either knee-deep in the audit process or you’re about to be. Either way, you need to know more about what this letter is, how to handle it, and the next steps you should take after receiving it.
The sooner you get informed, the better position you’ll be in to navigate the complex process of an IRS audit. Read on to learn more about how an IRS IDR works and what to do if you need help with your tax issue.
What is an IDR? What’s Form 4564?
Form 4564, otherwise known as an Information Document Request or IDR for short, is a specific request for information from the IRS. Usually, you’d get this type of form if the IRS has selected your account for auditing purposes. You might also get this form if you’re already mid-way into an audit and the IRS determines that they need even more information than originally requested.
IRS Code Section 7601 gives the tax agency the legal authority to request information from taxpayers that may be relevant to their tax situation. That means the IRS can request your pay stubs, bookkeeping records, any financial materials, or other data that pertains to your potential tax situation. What’s more, the IRS can request this information on any basis. You don’t have to be breaking any laws or even be suspected of breaking any laws. The IRS can initiate an audit and request information just for assurance purposes.
What to Expect When You Receive a Tax Information Document Request from the IRS
You shouldn’t receive an IDR until after you’ve received an IRS audit notice. If you receive the IDR, review it carefully and make sure you understand the documents that the IRS wants. Then, prepare a complete and accurate response.
What if you don’t respond?
Not responding to the notice at all will likely result in further action by the IRS. The IRS Revenue Agent assigned to your case could issue a court summons.
A court summons means you’ll still have to produce the papers or data requested in your IDR form, but you may also have to testify about your financial situation under oath. You need to take an IRS summons very seriously. While your tax situation itself shouldn’t lead to criminal consequences, a failure to comply with a court order can be considered a crime. The IRS might also consider taking you to civil court.
Should you get help with the IDR?
If you’re not sure what to do or how to complete the request, then it might be best to seek out tax representation from a qualified tax attorney. A professional can help you make an informed decision on how to proceed. Below, we’ll go over some general steps you should take to help you decide how to deal with your IRS information request.
Steps to Take After Receiving Form 4564
If you do receive a Form 4564 in the mail, then it shouldn’t come as a surprise. You should’ve already been informed about your tax audit via either mail notice or speaking directly with an IRS agent. If you were unaware of your pending tax audit situation, then you’ll want to verify that you didn’t receive the letter in error.
If you already knew about your audit, then this form is just you doing your part to help the IRS conduct its investigation. Below, we’ll go over what you should do step-by-step to remain compliant.
1. Gather Your Financial Documents
First, read over your IDR and audit letters to identify what type of financial documents, data, or information the IRS is requesting. If you’re not sure, then you can contact the IRS or the IRS agent assigned to your case to help you determine what type of documentation you need to provide.
In general, you’ll need to provide your financial statements, any pay stubs, and any information about your income from the year the IRS is auditing you. If you have a bank account, then you can request your bank statements that prove how much income you received throughout the year. You should also provide the IRS with your employer’s information.
If you have a business, then the IRS may want to see your bookkeeping records, checks, and other receipts. You’ll also need to provide proof of any expenditures or deductions that you claimed. If you claimed deductions or tax credits for children, student loan interest payments, or other reasons, then you’ll want to provide that proof as well.
Keep in mind that the IRS can also request electronic records. They could ask for your usernames and even your online passwords.
2. Review Your Tax Return
Once you’ve gathered your financial records, it might be a good idea to review the tax return you submitted. Doing so will help you better understand whether you filed your returns accurately. In some cases, you may identify an error and correct it by speaking with the IRS agent assigned to your case and submitting the proper documentation.
3. Know Your Rights
Next, it might be in your best interest to get informed about your rights as a taxpayer. It’s usually best to fully understand your rights and responsibilities before moving forward in the audit process. That way, you can make sure that your rights are respected throughout the process, and you’ll avoid any unnecessary problems that may arise if you don’t meet your obligations as a taxpayer.
In general, here are the rights that you need to know about as a taxpayer:
- Your right to be treated equally by IRS employees
- Right to privacy and confidentiality
- Right to know how your financial data will be used by the IRS
- Right to representation
- Right to appeal disagreements
You’re obligated to adhere to the IRS’s requests, declare your income, and file your returns on time accurately. If you owe money, then you’re required to pay the tax agency in full immediately or arrange an alternative resolution, such as a payment plan or currently not collectible status, with the IRS.
4. Seek Out Tax Representation
You always have the right to seek out tax representation from professionals. A tax attorney can help you better understand the legal aspects of your tax decisions and the consequences of your past tax choices. They can also help you leverage the law to keep you out of tax trouble in the future.
While you’re going through an audit, a tax lawyer will be your best legal advocate. They can field negotiations with the IRS, help you organize your financial documents, complete and submit IRS Form 4564, and ensure your rights are upheld along the way.
Form 4564 IRS FAQs
Do you have more questions about IRS Form 4564, how the audit process works, or why you’re being audited? Below, we’ll go over some of the most frequently asked questions about the information document request from the IRS.
Can Form 4564 Be Completed Electronically?
Yes, it is possible for to respond to the IRS Form 4564 electronically. If the IRS agent allows it, you can submit the requested documentation or records by e-mail or uploading them through the IRS secure portal.
What Happens After I Submit a Response to Form 4564?
After you submit your response to Form 4564, the IRS will continue with the audit process. uring an audit, the IRS will investigate your finances, review your tax returns, and ensure that your tax situation is all in order. If everything looks good, then no further action will be needed on your part. The investigation will conclude, and you will be informed of the results.
However, in some cases, the IRS may need to ask additional questions and request more information. Depending on the complexity of the situation, there can be a fair amount of back and forth before the process officially ends.
Why am I Being Audited?
The IRS has the right to audit any taxpayer, and some returns are selected completely randomly. Others are selected because of certain audit triggers. For instance, some returns are selected based on the potential for an abusive tax avoidance situation in the return. Others are selected by computer algorithms that determine a taxpayer’s percentage of change in their tax situation year by year or because info on their return conflicts with info received by other parties.
What If I Receive a Tax Bill I Can’t Pay Off?
Sometimes, a tax audit reveals unknown tax burdens that result in a tax bill, and you may also incur audit penalties. If possible, you should pay off the bill in full right away. If you can’t, then you should get in touch with the IRS about arranging a payment plan, or other alternative arrangements, as soon as possible to avoid additional penalties and interest.
Can an Audit Send Me to Jail or Cause Other Problems?
In general, the IRS is not looking to send taxpayers to jail over tax issues. They will not send you to jail for making an error or honest mistake. That being said, it is a crime to willfully and intentionally avoid paying your taxes. If you’re found guilty of committing tax fraud to avoid paying your fair share, then you could get sentenced to some jail time.
Are You Currently Facing an IRS Audit?
Have you recently received IRS Form 4564 in the mail? In a nutshell, this official document from the IRS outlines the department’s need for additional documentation, proof, or information from the taxpayer to complete a full audit of the person’s finances and taxes. This type of request typically happens at the beginning of the audit process, but it isn’t uncommon for the agency to send out additional IDRs when more details are required as your audit case progresses.
The biggest problem with these forms is that the average taxpayer isn’t equipped to handle a tax audit or the complexities that come along with it. You may not understand fully what information the IRS is looking for, or you may have already discarded the required documents, forms, or statements.
Unfortunately, this might mean you’ll need to do some digging. You may have to contact previous companies, banks, or financial lenders to obtain the information the IRS would like to see. If you’re overwhelmed trying to navigate the challenges of your IRS audit, or you need help with your IRS Form 4564, then our team of experienced tax attorneys at Wiggam Law are here to help.
Call us today at (404) 233-9800 or schedule a consultation find out how we can help you navigate your IRS audit.