Most people have experienced the fear and monotony of receiving an audit letter from the IRS. The impact usually wears off in a day or even a week. Although highly unlikely, there is a fear that the IRS may even be waiting around the block and waiting to put you in jail. It’s funny to say, but a real feeling for many.
For the most part, we don’t intentionally seek to defraud the government on our tax returns by underreporting earned income or lying about deductions that never occurred or for which we have no proof. Even if you tried to do these things, the IRS system is efficient enough to catch this fraud and penalize you for it, believe it or not. In the long run, it pays to do the right thing and file an accurate return, even if you owe a balance and don’t have the money to pay the full amount due.
Very often, despite filing an accurate tax return, you may still receive an audit letter from the IRS. What is your job? Not open the letter and pretend you never got it? Open the letter and yell at her because she thinks she’s a victim of the system? Or do you try to respond even though you have no idea what the letter says? We are 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 resolve this issue.
open the letter and read it
Simple… yes, but you’d be surprised how often this doesn’t happen. Why do you ask? Fear more than anything. Every time you get an email from the IRS, you think… oh wait a minute, this can’t be a good thing it could be true. But, this does not ignore the fact that you must open the envelope and read the letter. At the very least, you need to understand that the IRS works on a schedule and that every letter has a clock attached to it. You only have so much time left to respond before the IRS decides to take matters into their own hands. And you definitely don’t want the IRS running your business. So how do you overcome this fear of opening the letter? Take a deep breath and know that your world will not stop or end once you open it up. In the case of bad news, proceed to the next step below.
Will you drive it yourself or will you pay someone to drive it?
After opening and reading the letter, you must be honest with yourself. Do you really understand what the letter says and what the IRS is asking for, if anything? Most, if not all, IRS letters, even audit-specific ones, have their own language and tone. Unless you’re logical and stoic when it comes to tax code matters (not saying anything here about your level of intelligence or common sense) to some degree, you’ll have a hard time wrapping your thoughts around structure and content. about it Most of the time, IRS language can sound like it was written by a robot. If the matter is tax related in terms of your tax return, I recommend that you seek a competent tax advisor to review and give you a summary of its contents. A solid tax advisor will charge a minimal fee for this (no more than $50) and not only give you a summary, but also give you one or two options to resolve the problem. Don’t waste your time trying to fix something you don’t understand. Invest the minimum fee and find a tax advisor to help you.
These IRS audit letters can be scary and unpleasant. But by staying calm and partnering with a competent tax advisor, you will have put yourself in a position of control and confidence.
