IRS Correspondence Audit in Phoenix 

An IRS correspondence audit in Phoenix is the most common type of audit to examine items at question on a tax return. Typically, you will receive a letter with a deadline and specific instructions on what information to provide. While you can respond yourself, seeking legal help from a tax controversy attorney is a wise move, especially for complex issues.

If you fail to respond to the audit letter by the deadline, the IRS can automatically disallow your claimed items and legally assess additional tax, interest, and penalties. While correspondence audits often focus on a few specific issues, they can potentially expand in scope or escalate into a more serious office audit or field audit if the IRS is not satisfied with your response. An IRS audit lawyer can ensure your rights are protected from the earliest stages, minimize potential liabilities, and proactively address all points of concern with the IRS on your behalf.

What Should Taxpayers Know About IRS Correspondence Audits?

A correspondence audit in Phoenix is the least formal type of IRS audit, and is typically conducted by mail to resolve a few specific issues on a single tax return. The IRS sends a letter requesting additional information and the taxpayer must respond by mailing back the requested documents to the IRS by the appropriate deadline.

The notice will specify the documents needed, where to send them, and who to contact with questions. These audits are frequently used to examine tax items like the Earned Income Tax Credit (EITC), and proof of deductions claimed, such as those for business expenses, medical expenses, or itemized deductions.

The IRS may request more information with a correspondence audit to clarify self-employment income or other income that appears inconsistent with bank deposits, or to correct simple mistakes on a tax return. Dependent claims, Schedule C expenses, and other issues that can be resolved with simple documentation are also common reasons for an IRS correspondence audit.

The process is largely automated, which means there may not be a single IRS agent assigned to the case. If a taxpayer does not respond by the deadline, the audit can proceed without their input, potentially leading to a Notice of Deficiency.

Potential Outcomes of a Correspondence Audit

There are several potential outcomes to an IRS correspondence audit. These include:

• No change: The IRS accepts your tax return as filed after reviewing your documents. Your return remains unchanged and the audit is closed.
• Agreed changes: The IRS proposes adjustments due to a discrepancy, and you agree with their findings. This can result in owing additional taxes, penalties, and interest, or it could mean you are due a refund. If additional taxes are owed, an attorney can help you make payment arrangements with the IRS.
• Disagreed changes: The IRS proposes changes that you do not agree with. In this case, you have the right to appeal the decision through the IRS Office of Appeals or petition the U.S. Tax Court.
• Default outcome: If you fail to respond to the audit letter, the IRS will proceed with its proposed changes and assess additional taxes, penalties, and interest. The IRS may begin collection actions, such as wage garnishments or bank levies.

The experienced attorneys at Dayes Law Firm can help you organize specific documentation requested by the IRS while actively seeking a resolution.

How Can a Lawyer Help with IRS Correspondence Audits?

A Phoenix attorney can ensure the IRS follows all proper procedures and respects your taxpayer rights throughout the correspondence audit process. They can intervene if the IRS oversteps its bounds. In rare but serious cases where tax fraud is suspected, an attorney can help prevent the audit from escalating into a criminal tax investigation.

Any changes resulting from an IRS correspondence audit will be communicated to state tax authorities, which could trigger a parallel state tax audit. An unfavorable audit outcome can lead the IRS to more closely scrutinize your tax returns in subsequent years, and increase your risk of future audits. Our attorneys can work tirelessly to prevent such an outcome.

A lawyer can help ensure that the audit does not expand beyond the specific issues originally raised in the IRS notice. For cases where the IRS finds a discrepancy, a lawyer can negotiate a more favorable outcome, potentially reducing the tax liability or penalties. We can also negotiate payment plans or an Offer in Compromise if the taxpayer cannot pay the amount owed.

Contact an IRS Correspondence Audit Attorney in Phoenix Today

Our legal team knows what information to provide to ensure your response to an IRS correspondence audit in Phoenix is thorough, but does not open the door to further investigation. If you disagree with the IRS’s findings, our attorneys can help you file an appeal with the IRS Office of Appeals and potentially settle the dispute without needing expensive litigation. Contact Dayes Law Firm today to request your free and confidential case review.