IRS audit—are there any two words more frightening to the American taxpayer? Every year, the IRS selects a small percentage of tax returns from individuals and businesses for further examination, whether due to random spot-testing, abnormal results from statistical screening, or other reasons that indicate that the reported information on their tax return may not be correct.
If you have received an IRS audit letter in the mail, it doesn’t necessarily mean you have broken any laws or done anything wrong aside from, perhaps, making an honest mistake. It doesn’t mean the IRS is going to come breaking down your door.
But receiving an IRS audit letter does mean you need to read everything very carefully and pay special attention to all instructions and deadlines. Furthermore, it’s important to carefully examine your audit letter to make certain it is legitimate and not the result of a scammer attempting to scare you into becoming their latest victim.
Read on to learn more about what a legitimate IRS audit letter looks like, how to spot scammers trying to take advantage of tax anxieties, what the information provided in an IRS audit letter means, and how to respond to an audit notification and defend yourself.
IRS Audit Letter Sample – What’s in an Audit Letter?
An audit letter will arrive in an envelope via certified mail through the U.S. Post Office and will clearly identify your name, taxpayer ID, form number, employee ID number, and contact information. The language of an IRS audit letter tends to be very straightforward and clearly states the intentions of the IRS.
An IRS audit letter begins by informing you that your federal income tax return for a given year has been selected for examination. The IRS will explain, in detail, their queries regarding your tax return and what they need from you. The IRS will always provide a written request for the specific documents they would like to see.
Some audits can be responded to via mail, but many IRS audits will be conducted in person via a field interview as well. If your IRS audit letter informs you that your tax return has been selected for an in-person interview, the letter will be more detailed and have further information regarding the specifics of your upcoming in-person field audit such as:
- Appointment date and time
- Examination location
- Contact information for your agent
- Your agent’s employee identification number
- A date by which you must contact the agent to make any appointment changes
- Approximate length of the examination
- Who may attend the examination
- What to bring with you
A letter notifying you of an upcoming in-person interview will also reference Form 4564, also known as an Information Document Request, with detailed information regarding the documentation you need to produce.
Audit letters will vary from taxpayer to taxpayer, with specific details regarding their unique tax situation and the clarifying information the IRS seeks. While they come in many shapes and sizes, a sample audit letter from the IRS might look like this:
IRS Audit Letter Sample
Internal Revenue Service
Department of the Treasury
11166 Fairfax Blvd.
Suite 500
Fairfax VA 22030
Taxpayer name and address
Taxpayer Identification Number
Tax Year
Form Number
Person to Contact
Employee Identification Number
Contact Telephone Number
Fax Number
Dear FIRST NAME MIDDLE INITIAL LAST NAME:
We have selected your federal income tax return for the year shown above for examination. We examine tax returns to verify the correctness of income, deductions, exemptions, and credits.
What You Need to Do
This section will have detailed information regarding how to contact the tax agent assigned to your audit.
Going further, the IRS letter will clearly lay out issues to be reviewed during your examination, your appointment details (if the audit is in-person), and the rest of the information described above.
An IRS audit letter may also lay out your rights as a taxpayer and specifically mention your ability to have an attorney represent you.
How to know if an IRS Audit Letter is Real
Taxes are serious business, and communications with the IRS or other government revenue agencies need to be taken seriously and treated with appropriate urgency. Sadly, this also means that many unscrupulous actors use the threat of an IRS audit and other tax problems to attempt to scam millions of Americans every year.
Don’t fall for IRS scams. Bad actors take advantage of the average person’s unfamiliarity with how the IRS works to scare them. Most IRS communications, such as an IRS audit letter, will arrive via certified mail only. Furthermore, an audit letter will always contain the following information:
- Your name
- Taxpayer ID
- Form Number
- Employee ID Number
- Contact Information
The vast majority of IRS audit scams will ask you to provide the information above. The real IRS already has this information on file—they don’t need to ask you to send it to them! While the audit letter will ask you to provide information for them, the information they will ask for will always be clearly related to the reason for your audit, which you can read on to learn more about.
The IRS will never use an aggressive tone in its audit communications. As you can see in the IRS letter sample above, the language will always be clear, detailed, and neutral in its tone. Only scammers will try to scare you with loaded language.
The IRS provides a comprehensive guide to identifying tax scams on its website. These resources are helpful for spotting the scare tactics scammers use to take advantage of innocent taxpayers.
How does the IRS notify you of an audit?
You will be notified about an audit with a letter sent by certified mail, informing you that your tax return has been selected for an audit. The IRS will never try to contact you about an audit, tax debts, or tax refunds via email, phone call, or SMS, and will never ask you to make immediate payments or to pay only utilizing a specific payment processor or vendor.
Why am I being audited by the IRS?
Receiving notice that your tax return has been selected for an examination is a stressful event, but it’s important to remember that beingaudited by the IRS does not necessarily mean you have committed any crimes or even that you have done anything wrong.
An audit is simply the result of a few items on your tax return requiring closer examination.
The IRS audit letter will always include details on which items on your tax return require further clarification. They will have clear and straightforward questions for you regarding these items, which tend to be related to:
- Underreported income
- Itemized deductions
- Proper recognition of dependents
- Filing status
- Credit eligibility
There are many reasons why the IRS may decide to audit your tax return including random spot-testing, human error, or any other red flag the IRS may spot that indicates that reported information on your tax return may require a closer look. Audits can also merely be the result of the IRS just not having enough documentation from you to confidently confirm the details of your tax return.
Reasons for an IRS audit include:
- Failure to properly report income
- Filing errors, such as input issues or mathematical mistakes
- Large numbers of itemized deductions that seem suspicious
- If business deductions are claimed as personal deductions and vice versa
- If your lifestyle seems out of reach for your reported income
- Unreported foreign accounts
- If you claim children who aren’t your dependents
Once again, being audited by the IRS does not mean you are a bad person or a criminal. Many audits are simply the result of honest mistakes being made when filing taxes—mistakes that you can rectify and resolve, especially when you have help from tax law professionals.
How to Respond to an IRS Audit Letter
Do not ignore an audit letter. If you ignore your audit letter, you are essentially giving up on defending yourself, and the IRS will assume it was correct in its initial judgment of your return and determine the amount of additional taxes you owe, as well as any penalties and interest.
An audit letter from the IRS will always request supporting documentation, such as receipts and other paperwork, to support the figures in your tax return. If you are being audited, your responsibility is to gather the supporting documentation needed, make copies, and send the copies—never the original documents—along with a written explanation of your position by the deadline laid out in the audit letter.
Read our blog, “How to Respond to an IRS Audit Letter” for more information.
Responding to an audit letter is the first step of your audit defense. The supporting documentation you provide can, in a best-case scenario, inform the IRS that their initial decision to audit you was made in error and that you owe no additional taxes, penalties, or interest. In other cases, your documentation can reduce the amount of back taxes, penalties, or interest you may owe if an error is found.
There is never any reason not to respond to an IRS audit letter and defend yourself! While audit letters are more straightforward than you might assume, there are nuances and specifics to responding to an audit that a regular taxpayer can miss, so it’s always important to seek out help from tax audit professionals.
When to Get Audit Help From an Experienced Tax Lawyer
Dealing with an IRS audit, and especially responding to your audit letter properly to give yourself your best shot at an audit defense, is difficult work and can require knowledge of tax law and experience negotiating with the IRS. The average American taxpayer does not have this experience, which can make dealing with an IRS audit even more stressful and overwhelming.
An experienced and compassionate tax attorney can assess your situation, help you gather the documentation you need to mount a good audit defense, and negotiate with the IRS on your behalf, all while protecting your confidentiality and privacy through attorney-client privilege.
If you’ve received an IRS audit letter, don’t delay. Our team at Wiggam law can help you evaluate your situation, recommend a course of action, prepare your defense, and negotiate with the IRS on your behalf. Give us a call at (404) 233-9800 or schedule a consultation online to get the audit help you need today!