Few things are more alarming than getting any kind of notice from the IRS, and an AUR (Automated Underreporter) notice is one of the worst. You should not put off responding, but what’s the right AUR notice action to take? A tax defense lawyer can help.
From a Tax Defense Lawyer: Effective Strategies for Responding to AUR Notices
These notices indicate discrepancies between the income reported on your tax return and information provided to the IRS by third parties and thus they demand careful attention and prompt action. The IRS’s AUR program is designed to ensure that all income is accurately reported, so when it identifies discrepancies, it sends an AUR notice detailing the differences and requesting an explanation or additional payment.
Here’s how to take the right AUR notice action:
1. Read It: Don’t Ignore It!
It is imperative to read this notice thoroughly and understand what the IRS is alleging before taking any action. Misunderstanding the contents of the notice may lead you to submit an improper response, and that could seriously complicate the resolution process. It’s always best to have a tax defense attorney read this with you to ensure you fully understand and nothing gets missed.
2. Get Professional Help
A tax attorney has experience with the tax code and with these notices. They can help you with every step of your response strategy, and you’re much more likely to have a good outcome with a tax defense lawyer than if you go it alone. This is particularly important if you have especially complicated tax issues or significant amounts of money are involved.
3. Gather Information
Once you have a clear grasp of the notice, the next step is to gather all relevant documentation to contest it (or at least parts of it). You’ll need any forms, receipts, and records that have to do with the income in question. Accurate and comprehensive documentation is your best defense, and your attorney can help you understand what you need.
Cross-referencing your records with those provided by third parties can sometimes identify the root cause of the discrepancy. In some cases, it might be a simple error in reporting or a timing issue.
4. Communicate Clearly
Let’s say the discrepancy has come because of a third-party reporting error. You can’t just ignore this or assume it will get cleared up. You have to communicate this clearly to the IRS. If an employer or financial institution has made a mistake in reporting your income, you will need to provide evidence of this error. This might involve obtaining corrected forms or statements from the third party. In your response, you want to clearly help the IRS understand that the discrepancy was not due to any fault on your part.
Now, let’s say the discrepancy is actually a mistake on your part: address this candidly and accurately. Provide a detailed explanation of the error, along with any corrected information, to show the IRS that you are taking the matter seriously and are committed to resolving it. Depending on the nature of the mistake, you may need to file an amended tax return.
5. Don’t Delay AUR Notice Action
The IRS typically provides a timeframe within which you must respond, and ignoring this deadline can lead to automatic adjustments to your tax return. This often means you’ll be responsible for additional taxes, penalties, and interest. Prompt action demonstrates your willingness to cooperate and helps in resolving the issue more swiftly. Mark the response deadline on your calendar and set reminders to ensure that you do not miss it.
6. Be Clear and Precise
Your letter to the IRS should be concise yet comprehensive, addressing each point raised in the AUR notice. Avoid using ambiguous language or providing excessive information that may confuse the issue. Stick to the facts, present your evidence logically, and ensure that your argument is easy to follow. This will make it easier for the IRS to review your case. You’ll likely want your tax lawyer to write this document for you to ensure it’s well-written and gets a good response.
7. Follow Up
Communication with the IRS does not end with the submission of your response. You have to follow up and ensure that your response has been received and is being processed. You can do this by checking your IRS account online or calling the IRS directly, and your tax attorney can take care of this for you, too. Keeping track of the status of your case allows you to both stay informed and find out quickly about any additional steps that may be required.
8. Be Careful Going Forward
Identifying the root causes of the discrepancy and addressing may help you prevent similar issues in the future. You might need to do better record-keeping, more carefully review of your tax returns before filing, or get professional tax preparation services. Of course, if the problem was with a third-party report, there may not be much you can do other than to make them aware of the situation and double-check the next time.
9. Don’t Let Your Rights Be Run Over
It may seem hard to believe at times, but as a taxpayer, you do have some rights when dealing with the IRS. The Taxpayer Bill of Rights outlines ten fundamental rights that you have in your dealings with the IRS, including the right to be informed, the right to quality service, and the right to a fair and just tax system. If you are aware of all these rights, at the very least you’ll have a sense of empowerment. If you believe any of these rights are being ignored, talk with your tax defense lawyer.
10. Learn About Tax Law Changes
Depending on your situation and how hands-on you want to be, you may want to ask your tax defense lawyer to keep you abreast of any changes in tax laws and regulations that might affect your reporting. Tax laws can change frequently, and sometimes even the way the law is interpreted can change.
11. Think About Alternative Dispute Resolution
If the issue in your notice is especially complex or contentious, you might want to consider mediation or other alternative dispute resolution (ADR) methods. The IRS offers various ADR programs, and some of them can help to resolve tax disputes more efficiently and amicably. These programs can provide a platform for you to present your case in a less adversarial setting and potentially reach a resolution that is satisfactory to both parties. Ask your tax lawyer about whether these might be right for you.
12. Stay Proactive
Regularly review your financial records, make sure that all income is accurately reported, and address any discrepancies as soon as they are identified. If you’re proactive, you can mitigate the risk of receiving any AUR notices at all; and you’ll also ensure that any issues that might arise from a third-party error can get resolved more quickly.
Responding to AUR notices effectively requires attention to detail, timely action, and a thorough understanding of tax laws and IRS procedures. It’s a lot for anyone to handle, that’s for sure, but with a skilled tax lawyer on your side, things will go more smoothly than they otherwise could. Contact the Silver Tax Group in Austin, TX now for help.
