IRS Alert: New Correspondence Audit Hotline Now Available
- Lost mail
- Slow processing of responses
- Lack of specific IRS staff assignment to taxpayer audits
- Obtain and review the IRS audit letter.
- Call the IRS agent and inform him/her that you are representing the client and will fax the agent a completed and signed Power of Attorney.
- Obtain and review the material and related documents requested in the IRS audit letter.
- Send the material to the IRS agent with a cover letter itemizing the material that is being sent.
- Mail the letter along with the material by certified mail and send a copy to the client.
- Call the IRS agent and inform him/her that the material is being sent and ask that the agent’s report be mailed to you as well as to the client.
- Review the agent’s report and if there is a disallowance, check the veracity of the additional tax as well as the interest computation.
- Call the agent if penalties are assessed and request penalty abatement. If granted the request, ask that a new report to be sent.
- Review the report with the client and have him/her sign the form agreeing with the agent’s findings.
- File an amended state tax return to report the IRS changes.
The most significant negative result of IRS processing delays for practitioners and their clients is receiving a premature statutory notice of deficiency, or ninety-day letter. Technically, a ninety-day letter allows protest of the assessment only in US Tax Court. At this point, the practitioner is left in bind: Try to get the IRS to correct the processing error or file a petition in Tax Court to protect the client's interest. Filing a petition is often expensive and time-consuming and requires an attorney. Most of the time, practitioners avoid Tax Court and hope that the IRS processes their response.
- Small business/self employed (SB/SE) is for taxpayers with schedules C, E, and F, and Form 2106.
- Wage and Investment (W&I) is for taxpayers with Form W-2 and investment income who may have itemized deductions.
If you're confused about the appropriate IRS unit for your client, look for the number at the top of the letter. If the phone number is (866) 897-0161, your client is in an SB/SE mail audit. If the phone number is (866) 897-0177, your client is in a W&I mail audit.
- Call early. Volume increases during the day. The IRS also informally suggests calling from Tuesday to Thursday, because calls increase before and after the weekend.
- Call only about mail audits resulting from Letters 566, 525, or 692, or related mail audit statutory notices of deficiency (90-day letters). This hotline doesn't address underreporter inquiries (CP2000 notices). In that case, call the PPS number and select Option 6 for the Automated Underreporter unit.
- The IRS will not speak to you unless you have authorization. Have Form 2848 ready to fax, if needed. The IRS will accept a correct Form 2848 and speak to you immediately.
- You should have all of your client's information available to meet the representative's disclosure screening. The IRS will request your client's name, address and Social Security Number (SSN), and may request your client's date of birth and filing status.
- Document the call. Get the IRS representative's name and badge number. Document what occurred and what the representative agreed to during the call. Remember to follow up on deadlines.
- If you have more than ten documents to provide, send them by mail. If you fax volumes of documents to the IRS, they'll get mixed in with other items the IRS receives by fax.
- If your client's deadline is approaching, call the IRS to request an extension of time to allow for processing of documents you mail and avoid a premature next-level notice.
- If you mail documents, add page numbers ("page __ of __") and your client's name and SSN to each page. This allows the IRS to assemble all of your client's documents.
- If your client's records are extensive or you need the IRS to consider the facts and circumstances, requesting a face-to-face audit may be preferable. However, to request a face-to-face audit, the IRS requires that you attempt to work with the examiner by mail. If you can show "cause," which often means extensive or complex documentation, you can ask for the case to be transferred to the local IRS office or field audit group.
Source: Beyond 415