Lawrence Lawler: Hello! I'm Lawrence Lawler, National Director of the American Society of Tax Problem Solvers. This series is on how to prepare for an IRS Audit. We're going to discuss the types of audits in the next section.
The first being the Correspondence Audit or as it may be appropriately named a Letter Audit, the IRS mails you a request for information and request that you provide supporting documents by mailing this back to the IRS. You don't sit down with an Auditor or anything else and everything they want from you they put in writing. So we'll discuss that Correspondence Audit first.
It almost always is only selected items from your tax return. Very, very seldom will they ask for more than three or four items to be examined. If they don't find any problems with those, the audit could be closed very, very quickly. They often will not ask for any additional data, if you submit what they have requested in their correspondence. Send it in, in an organized and orderly fashion. The easier you make it for the Auditor to go through the information, the faster they can close the case.
And by the way, a little tip here is most of these auditors have far more cases than they are able to handle easily. So being able to close a case quickly is in their best interest as well, and obviously in yours. You always want to respond in writing, you don't want to be calling the Auditor and getting on the telephone with them, that isn't what they ask for and you want to send photocopies. Don't ever send original documents because you may have to provide them again at some other point in time.
Include carefully worded explanations and this is where a representative can help you. If you are not sure how to explain an item on the tax return, get help doing it. And of course, secure proof that you mailed it or had it delivered, whether you deliver it in person, they will give you a receipt for the documents you drop off at the IRS or if you mail it you can always get a certified return receipt from the IRS, so you can prove that you did send something in, and when you send it. Because you do want to make sure you're responding timely.
After you've gathered this information and you're ready to submit it to the IRS, if you're going to do it by sending it through the postal service, make sure that you get a certified return receipt so that you can prove that you actually send it back to them. If you happened to be near the IRS office and you're going to deliver it, you can drop it off and ask them for a receipt that you've delivered this information to them and that way you'll still have proof that you delivered the information that you were requested to.
So that's a pretty good overview of what's involved in the easier or in the less invasive type of an audit being a Correspondence Audit.
The next item we'll be discussing will be the Office Audit, which is where you go in person and sit down with an examiner.