The IRS Letter You Don't Want to Receive
A letter from the IRS used to send each of us into fits of anxiety. Now we get them all the time, since the IRS likes to send us forms every other day. That being said, there is still one particular letter you do not want to receive from the agency.
The first thing you will notice about the letter is it is thin. This should worry you. If it contained forms it would be thick. As you open it, you see at first glance that it is not a form letter. This one has your name and social security number on it.
The dreaded thin letter from the IRS promises misery in all its simplicity. It is usually a one page statement, but packs the punch of a tank. Why? The IRS notice is issued under only one circumstance. The agency has found something wrong with your taxes.
Now, it can be said in truth that the ubiquitous notice sometimes is a good thing. The problem can be that you paid too much money. I had this happen once. Eighteen dollars. This is, however, admittedly a rare event and the news usually is not positive.
The bad news is you are probably being audited if you receive this letter. Go ahead, cry. Let it out. Once you are done, actually read the full letter. The audit may not be the torturous event you are imagining. In fact, it rarely is.
For the majority of people, the indication you are being audited is not the foreshadowing of a rough time you might expect. Instead, you stand a good chance of receiving what is called a correspondence audit. Yep, you get to deal with everything by letter.
The real beauty of these mail audits is their simplicity. The letter will detail what the agency is contesting. It will also provide a potential solution for you. The solution may not even involve you paying more tax, but it probably will.
Once you receive the letter, the burden is on you. You are usually allowed to do nothing if you agree with the proposal of the agency. If you want to fight it, you have 30 days to send a letter saying as much and why.
If you accept the proposed changes, the audit is over as long as you take any required action such as sending in more money. If you want to fight the agency, you can. Understand, however, you might be opening yourself up to a full audit.
If you receive one of these letters from the agency, don't feel like you are being picked on. The IRS sends out millions of them each year to handle issues with taxpayers. If you get a particularly nasty one, go talk to a tax attorney so you know your rights.