What Happens When You Get Audited by the IRS?
If you receive an audit notice from the IRS, you need to acknowledge it and respond promptly. If you had your taxes prepared at Jackson Hewitt, then you should contact your local office before sending information or additional money to the IRS in response to an audit notice. The IRS may be in error and the audit may require the knowledge that only your tax professional can provide.
Who Gets Selected for an Audit?
Most audits are triggered either by computerized screening, random sample, or the income document-matching program. The document-matching program compares the income and amounts reported to IRS are on the return and verifies the amounts match.
There are also circumstances that may cause the IRS to examine your return more closely. For example, the IRS may request more information if your itemized deductions are very high or if you claim excessive small business losses.
You may also be selected to explain the treatment of an item on your tax return. If your business expenses or charitable contributions are high in relation to your income, you may receive an audit notice.
Many examinations result in a refund or acceptance of the tax return without change, but some may result in a change in tax liability.
The Examination Process: What Happens When You Get Audited?
The IRS audit notice may either require you to attend a subsequent meeting in person or to send additional information by mail. You may choose to have Jackson Hewitt assist you during your audit. A representative will explain how your tax return was prepared. Jackson Hewitt cannot act as your legal counsel or financial representative.
If the examination results in a change to your tax liability, you may want the IRS to reconsider your case. The IRS may reconsider your case if you are submitting additional information that could result in a change to the additional amount they determined that you owe, you are filing an original delinquent return after they determined that you owe an additional amount, or you have identified a mathematical or processing error they made. You should gather copies of your records, tax returns, and canceled checks, and any other necessary information to support your case. Your reasons for disagreeing cannot be based only on moral, religious, political, constitutional, conscientious, or similar grounds.
If you cannot reach an agreement regarding the proposed changes to your tax return, the IRS may send you Letter 525, General 30-day Letter, notifying you of your rights to appeal, a copy of the tax examiner's report and an agreement or a waiver form. If you do not respond to this letter, or if you still do not reach an agreement with the appeals officer, the IRS will send you a Letter 531, Notice of Deficiency. You have 90 days from the date of this notice to file a petition with the Tax Court. If you do not file this petition, you will receive a bill for the amount due.
Innocent Spouse Relief
If you filed a joint tax return, you are jointly and individually responsible for the tax and any interest or penalty due on the joint return, even if you later divorce. In some cases, a spouse may be relieved of the tax, interest, and penalties on a joint return. You can request relief no matter how small the liability. Three types of relief are available:
- Innocent spouse relief – This may apply to all joint filers.
- Separation of liability – This may apply to joint filers who are divorced, widowed, legally separated, or have not lived together for the past 12 months.
- Equitable relief – This applies to all joint filers.
Innocent spouse relief and separation of liability apply only to items incorrectly reported on a joint tax return. If a spouse does not qualify for innocent spouse relief or separation of liability, the IRS may grant equitable relief. Each type of relief is different and each has different requirements. You must file Form 8857, Request for Innocent Spouse Relief, to request any of these methods of relief.
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