Though the percentage of audits appears lower than in the past, most people will receive some sort of correspondence or notice from the IRS at some point in time. And as taxes become more complex, the chances of making mistakes on returns greatly increases.
There is no need to panic if you do receive a letter from the IRS. It’s possible you received a computer-generated notification that does not concern an IRS audit. However, it is important not to ignore the notice. If you do receive an audit or a notice of deficiency, there may be a requirement to respond by a certain deadline.
The first steps you should take
It is important to read the notice carefully. The notice should state the issue and provide information concerning how to respond. And as soon as possible, review your records to determine whether information in the notice appears accurate.
The IRS makes mistakes. The IRS may be short-staffed. Sometimes their figures are off. However, if you do not respond, the IRS may continue on the assumption that what they charge concerning possible deficiencies is correct.
There could also be discrepancies regarding what you report you owe for estimated taxes and what the IRS believes you owe because the IRS is adding particular penalties. Unless you correct such a discrepancy, there could be continuing issues arising in future years as well.
Do not ignore IRS inquiries
If you are facing a tax audit, you may be facing serious penalties including criminal charges. As notices will not go away by themselves, it may prove helpful to have legal counsel on your side to resolve differences that you have with the IRS.