Most people have experienced the fear and monotony of receiving an audit letter from the IRS. The impact usually wears off within 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 jail you. It’s fun to say, but a real sentiment for many.
For the most part, we do not intentionally seek to defraud the government on our tax returns by not reporting 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 uncover 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 him because he thinks he’s a victim of the system? Or do you try to reply even though you have no idea what the letter says? We’re going to share with you two simple ways to deal with an IRS audit letter so 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 any good it can be true. But, this does not ignore the fact that you must open the envelope and read the letter. At a minimum, you should understand that the IRS works on a schedule and that each 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 get over this fear of opening the letter? Take a deep breath and know that your world will not stop or end once you open it. In the case of bad news, continue to the next step below.
Will you run it yourself or pay someone to run 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 at all? 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 (saying nothing 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. of that. Most of the time, IRS language can sound like it was written by a robot. If the matter is related to taxes in terms of your tax return, I recommend that you find a competent tax advisor to review and summarize its contents. A solid tax advisor will charge a minimal fee for this (no more than $50) and will not only give you a summary, but also give you one or two options to resolve the issue. 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 off-putting. But if you keep your cool and partner with a competent tax advisor, you will have put yourself in a position of control and trust.
