What To Do When You Receive IRS Notices 

  • Promptly review your tax returns versus notices. Most of the time there must be a reason why you receive notices.

  • Respond to Taxing Authorities within their time frame. If you are unsure how to handle the issues, seek for professional helps from licensed & experienced top audit experts such as Certified Public Accountants or Lawyers.

 

  • Do not ignore IRS notices or letters. Tax audits or examinations are complex and time-consuming processes. Make prompt appointment to meet tax audit experts the sooner the better because your time is essential. Do not delay your response.

IRS & FTB Audits & Examinations 

 

The IRS & Franchise Tax Board tax systems are ones of the most sophisticated structures. Per IRS Publication 556, taxpayer’s return may be examined or audited based on a number of reasons:

The IRS enforces a complex program assigning a score to individual and business tax returns after they have been submitted and processed. Any tax returns with a high assigned score or having any red flags of abusing tax laws to hide income, increase unsubstantiated expenses to reduce or eliminate Federal and State taxes in any ways will have higher probability of being selected for examination or audit.

 

In addition, taxpayer’s return may also be selected for examination or audit on the basis of income and deduction information received from third parties that do not match with data or information reported on taxpayer's returns.

 

There are generally four common types of audits: Correspondence Audit, Field Audit, Office Audit and Taxpayer Compliance Measurement Program Audit.

  • Correspondence Audit. It is the most common and lowest level audit. The IRS needs additional information from taxpayers to verify, and taxpayers will be asked to submit them within a time deadline, normally within 30 days.

  • Field Audit. In a field audit, most likely for businesses, an IRS agent will come to taxpayer's business or home to examine all records. Field audit is one of the most comprehensive audits.

 

  • Office Audit. During office audits, taxpayers have to go to an assigned IRS office to meet with the IRS assigned agent or officer. Office audits are complex and involve with numerous steps, time-consuming and potentially generate more issues.

  • Taxpayer Compliance Measurement Program (TCMP) audit. TCMP works on randomly selected basis. In a TCMP audit, every line of the tax return is audited and taxpayers have to provide documentation for all deductions.

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