Getting a notice from the Internal Revenue Service (IRS) can be nerve-wracking, especially when that notice is for an IRS audit. Audits can be scary, but they are also routine processes used to check your personal and financial information against the information you gave the IRS. It’s important to know how to respond to an IRS audit notice in Florida and what you could expect from the process.
The IRS Audit Notice
When the IRS sends you a notice of an audit, it will come through the mail. The IRS does not begin an audit process over the phone. The first notice will generally be a CP75 or CP75A notice, called a Request for Supporting Documentation. It will include information like:
- The tax year or years the agency is reviewing
- What parts of your tax return are being reviewed
- The copies of documents and information the IRS needs to verify
- The date by which you need to respond
It’s crucial you carefully review your notice for what you should do next and how you should respond. The IRS might request proof for claims such as:
- The Earned Income Credit, which requires proof that you live with your child in the United States for a majority of the tax year, the child is related to you, and other specifics to claim the credit
- Dependent claims, which require you to show that you can claim another person as a dependent
- Filing status, which may require you to prove you qualify as the head of the household or that you are married and filing separately to claim the Earned Income Credit
- The American Opportunity Credit, where you have to prove that the student you claimed the credit for attended the institution, and payments were put toward necessary school expenses
Don’t Ignore Your IRS Notice
The purpose of an audit is to verify the information you reported on your taxes, ensuring that the amount you paid is correct.
If you don’t respond to the IRS audit notice, you will be giving up your chance to prove that you could claim the credit or deduction. If the IRS does not get a response, it will assume you cannot claim it and will amend the amount you owe in taxes, sending you these proposed changes. This can cause you serious financial issues. If you don’t pay the amount the IRS requires you to, the agency can begin taking collection actions to recover your debt.
Why Do Audits Happen?
Some taxpayers think that audits only happen because the IRS believes they have done something wrong. This isn’t the case. The IRS conducts many audits each year. In fiscal year 2024, the IRS secured $29 billion from the 505,514 audits it closed. Field examination audits resulted in $23 billion, while correspondence examination audits resulted in $6 billion. There were 444,014 audits of individual income tax returns closed.
The IRS conducts audits through:
- Random selection of taxpayer returns
- Automated screening that discovers a discrepancy from the established norm
- Related audits, meaning auditing taxpayers who had transactions with other audited taxpayers for either of the above reasons
There may be issues in your taxes, but an audit can simply mean the correction of those issues; it doesn’t mean the IRS will accuse you of fraud or evasion. An audit can also result in no changes or issues found in your taxes. You should take the process seriously, however, and ensure you provide the necessary information and take the proper steps.
How Do Audits Resolve?
It takes at least 30 days for the IRS to review the documents you sent as proof. When the agency reaches a decision, you will receive a notice. An audit may result in the IRS determining no change is needed, or you may have to pay more in taxes. The IRS may also determine you paid too much in taxes and issue a refund. Only in very rare cases do audits result in more serious consequences.
FAQs About IRS Audit Notice in Florida
How Do I Respond to an IRS Audit Notice?
If you receive an IRS audit notice, it’s important to review the letter carefully and respond promptly. The notice will inform you of the information and documentation you need to gather, and what tax years are being audited. There is a response form at the end of the notice, which you can send to the IRS with copies of the requested documentation, either through fax or by the IRS’s online or mobile tool.
What Shouldn’t You Say During an Audit?
During an audit, it is important to only provide the information requested of you and give clear answers. Never speculate or guess, or give the auditor unrelated information that they did not ask for. To better protect your rights during an audit and help you prepare for the process, it’s helpful to work with an Miami IRS tax attorney.
What Should You Do if You Get an IRS Audit Notice?
If you get an IRS audit notice, you should gather the information requested and respond on time, and you should never ignore the notice. You can request more time from the IRS if you need it to gather documentation. If you ignore the notice and do not respond within the required timeframe, the audit will continue, and it will not have the documentation you provide to prove why you took certain credits or deductions.
Is It Important to Hire a Tax Attorney for an IRS Audit?
It is often important to hire a tax attorney for an IRS audit, because an attorney can streamline the process and contact the auditor on your behalf. An attorney helps you understand the audit notice, gather the information you need, and be aware of your rights. If there are issues in your tax information, an attorney can help you take preemptive action to report the issue. Your attorney can also assess your options after an audit has concluded.
TaxSmith, LLC: Your Florida Tax Lawyer
At TaxSmith, LLC, we have years of experience navigating tax codes and audits. There are several IRS Taxpayer Assistance Center (TAC) offices located throughout Florida, including one in Sarasota, one in West Palm Beach, and one in Jacksonville. Our attorneys have experience with IRS TAC offices and can represent you in negotiations at these offices or at your place of business for in-person audits. Reach out to us today.
