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Most people have experienced the dread and drudgery of getting an IRS audit letter. The tremor usually stops within a day or a week. Although very unlikely, there is a fear that the IRS is waiting around the block waiting to put you in jail. Funny to say, but a real feeling for many.
For the most part not all of us intentionally try to defraud the government on our tax returns by not reporting earned income or lying about deductions that either never occurred or we don’t have proof of. Even if you tried to do these things, the IRS system is efficient enough to uncover this fraud and punish you for it, believe it or not. It pays in the long run to do the right thing and file an accurate return, even if you owe arrears and don’t have the money to pay the total amount due.
Sometimes, despite filing an accurate tax return, you may still receive an IRS audit letter. What do you do? Didn’t open the letter and pretend like you never received it? Open the letter and scream at it because you believe you are a victim of the system? Or do you try to respond even though you have no idea what the letter is saying? We are going to share with you two simple ways to deal with IRS audit letter so that you can have peace of mind and more importantly, a concrete plan to solve this problem.
open the letter and read it
Simple… yes, but you’d be surprised how often it doesn’t. Why are you asking? Fear more than anything. Every time you get mail from the IRS, you think… oh wait a minute, that can’t be too good to be true. But, that doesn’t negate the fact that you should open the envelope and read the letter. At the very least, you should understand that the IRS operates on a timetable and each letter has a time clock associated with it. You only have so much time left to respond before the IRS decides to take matters into its own hands. And you certainly don’t want the IRS to take over your business. So, how do you overcome this fear of opening letters? Take a deep breath and know that your world will not stop or end once you open it. In case of bad news, go to the next step below.
will you handle it or will you pay someone to handle it
After you open and read the letter, you need to be honest with yourself. Do you really understand what the letter is saying and what the IRS is asking, if anything? Most if not all IRS letters, audit specific people also have their own language and tone. Unless you are logical and consistent with the tax code to a certain extent (not saying anything here about your level of knowledge or common sense) you will need to be able to wrap your thoughts around the structure and content. There will be difficulty. Its. The IRS language can come off as sounding robotic most of the times. If the matter is tax related in the context of your tax return, I would recommend you find a competent tax advisor to review its contents and give you a summary. A solid tax advisor will charge a minimal fee (no more than $50) for this and give you not only a summary, but an option or two to resolve the issue. Don’t waste your time trying to fix something you don’t understand. Invest a minimal fee and find a tax advisor to assist you.
These IRS audit letters can be scary and downright bad. But, if you stay calm and work closely with a competent tax advisor, you’ll put yourself in a position of control and confidence.
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