Getting a mailing from the Internal Revenue Service (IRS) can come with some pretty serious questions. The feds may have questions about your return, may accuse you of providing false information, and may even push for you to respond with additional information ASAP.
Once you review this letter it is important to take a breath and take a moment.
Although it is wise to respond within the deadlines provided in the letter, it is also important to make sure every step you take from this point on is done with intent. Know what you are doing, why you are doing it, and the possible repercussions that could come with that action. If you are not sure, it is imperative to seek legal counsel to help better understand the situation. This may sound extreme but depending on the details of the situation the IRS can push for serious penalties if it can establish an intentional violation.
During this moment of pause, you likely have a number of questions. This piece will delve into two of the most common and provide guidance to help you get a better understanding of the situation.
Why did the IRS choose me?
Whether as an individual or a business, the IRS likely chose your return because you triggered certain red flags. We discussed common triggers in more detail in previous posts, but some common examples can include a failure to report income, taking out too many deductions or credits, or making math mistakes. In some cases, it is simply bad luck because the IRS will choose some taxpayers for additional scrutiny at random.
What should I do next?
If you believe there is a large discrepancy and the IRS could come after a substantial amount or claim criminal wrongdoing, seek legal counsel. Most experts recommend seeking legal aid if the questions from the IRS are anything beyond a simple scenario.
One important note to add: tread carefully when it comes to requests from the IRS to waive the statute of limitations. Although it is important to be polite in dealings with the IRS, you generally do not need to accommodate extension requests. In fact, it is often in your best interests to decline such requests.
This is just one of many questions to navigate when facing an audit. The attorneys at Goldburd McCone are familiar with these and other issues and can advocate for your interests when dealing with the IRS.