What is a Correspondence Audit?

In short, a correspondence audit is an IRS audit that’s performed through the mail. The majority of IRS audits – over two-thirds – are correspondence audits. Rather than a full-blown, in-person examination of your assets, a correspondence audit simply requests that you mail in certain documentation supporting specific parts of your return. Here’s what you need to know about this type of audit.

Correspondence Audit = Low-Level Audit

Correspondence audits are considered the lowest level of IRS audit. These audits usually involve relatively small amounts of money, as IRS audits go, and are used for resolving fairly simple tax matters. If you’re the subject of a correspondence audit, you’ll generally receive a letter requesting further information regarding some aspect of your tax return. You might also receive a CP2000 letter, which informs you of proposed changes to your income, credits, payments, or deductions.

Remember that the IRS has up to three years to audit a tax return. If you get a request for documents from a year or two ago, that’s completely legal. Be sure you keep track of the last three years’ worth of documents, so that if you are audited, you will be completely ready to go.

You Still Need to Deal with the Issue

If you’re chosen for a correspondence audit, you most likely won’t have to meet with an agent in person, although you may have to hold a conference or two by telephone. However, you do need to deal with the IRS sooner rather than later. You might receive a 566 letter, which will provide you with a list of documents you need to submit to verify the accuracy of your return. Once you have provided that documentation, you should be able to move on with your life.

If the information you report in your return doesn’t match IRS records, you might receive a CP2000 letter, which will propose adjustments to your return, and possibly your tax debt. However, a CP2000 letter doesn’t always mean you’ll owe money. The IRS could also find that you overreported your income and are due a refund.

Either way, you’ll have the option to agree or disagree with what the CP2000 letter says. If you agree, and you owe a tax debt, you can either submit payment or request a payment plan. You need to do this right away. If you disagree, you’ll need to submit documentation to back up your claim. The IRS will then consider the documentation you sent and either drop the changes it wants to make or send it back to you for further review. Whichever way you choose to go, you have 30 days to respond.

It’s natural to freak out when you’re selected for an audit, but try not to become overwhelmed. Often, an audit finds that the IRS owes you money, not the other way around. In any case, if you’re concerned about navigating the auditing process, you don’t have to do so alone. Hire a tax attorney to help you deal with the IRS – and sleep easy at night.

Experienced Tax Lawyers Can Help with Your Audit

Any kind of audit by the IRS can be frightening and overwhelming, which is why it’s crucial to have a qualified legal team on your side. The attorneys of Mackay, Caswell & Callahan, P.C. can help make sure you retain your rights through the process and get the best possible outcome.

If you are being audited, set up a consultation with one of our attorneys. Fill out our online contact form, or call 844-MCC-4TAX (622-4829) to speak with an experienced tax lawyer from one of our offices in Albany, New York City, Rochester, Syracuse, Utica, and Watertown today.

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Joseph M. Callahan

Licensed since 1986

Member at firm Mackay, Caswell & Callahan, P.C.

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