How to Approach an IRS Audit or Collection Letter
It is important that you read the an IRS audit or collection notice carefully and respond in a timely way.
May 13, 2011
How to Approach an IRS Audit or Collection LetterA common first reaction to an Internal Revenue Service audit or collection letter is panic, followed closely by frustration. However, it is important that you read the letter carefully and respond in a timely way. The IRS will let you know the reason for the audit or collection notice in the letter. The sooner you act, the sooner it can be resolved, reducing potential interest and penalties you owe.
You Are About to be Audited. Now What?
The IRS audits taxpayers with discrepancies on their returns, if they've audited a related return, such as a business associate or employee, and random returns determined by a statistical formula. The IRS letter should state why you've been audited and what actions you need to take. Generally, the letter will state:
-The time and place of the audit, if a meeting is necessary
-What documents you'll need to provide the IRS
The most important part of an audit is gathering the documentation. Make sure you go through the entire audit process, especially if you disagree with what the IRS claims you owe -- don't just agree to a settlement to get it out of the way. You do have a right to representation through the audit process, and some choose to go through audits with experienced attorneys.
Dealing with IRS Collection
Occasionally people find themselves in a position where they start receiving collection notices from the IRS. The IRS will send notices to taxpayers who have failed to file or are late on payments. If the issue is not resolved, the IRS may levy wages, bank assets or property.
The IRS may levy assets even if you disagree you owe the taxes they claim; in order to dispute a tax burden, you must file an appeal with the IRS. It is in your best interest to resolve the dispute or amount owed, even if the collection letters can be overwhelming. Even if you feel you are unable to pay, it is generally a good idea to bring your outstanding debts down with the IRS. Penalties and interest can make a manageable tax burden turn into something that you cannot pay.
If you are receiving letters from the IRS, you may want to contact an attorney to help you navigate the process. Help with audits, appeals and tax relief like an Offer-in-Compromise can greatly reduce the stress associated with disputes with the IRS, and can sometimes reduce the amount owed.
Article provided by Eno, Boulay, Martin & Donahue, LLP Visit us at http://www.ebmdattorneys.com