An IRS audit letter can be a scary thing to receive in the mail. The fear can be heightened when you begin to worry about whether or not it is really from the IRS or if it is a potential scam. Many people don’t even know who the IRS is or what an audit is, so when you put the two together it becomes even more confusing. If you know how to identify an IRS audit letter, read it and understand what it means, you can breathe a little easier. Thankfully, there are things that you can do and look for to identify an IRS audit letter and tell if the IRS is truly auditing you or if you’re the victim of a scam.

How to identify an IRS Audit Letter

IRS audits can be confusing and intimidating, especially if you’ve never received one before. The first thing you should do after receiving an IRS audit letter is confirm whether or not it is legitimate. Here is a list of things that you can do to determine if the letter really came from the IRS or if it is a possible scam:

• Check the letter’s address: the IRS will always send audit letters from their official postal address. If the letter is coming from a different address, it’s likely a scam. 
• Look at the envelope itself. IRS audit letters will always be sent via certified mail, so if the letter isn’t coming through that method, it’s not legitimate. 
• Open up the letter and check the details. IRS audit letters will include your full name and social security number, as well as specific details about why you’re being audited. If any of these elements are missing, the letter is probably a fake. 

What/Who is the IRS?

IRS stands for the Internal Revenue Service. It is the primary tax collecting agency for the United States federal government. IRS is responsible for issuing tax laws, issuing refunds, and enforcing tax laws. They also audit taxpayers to ensure that they fully comply with the tax code. The IRS has a wide range of enforcement tools, including levies, liens, and seizures. IRS also conducts criminal investigations and can prosecute taxpayers for serious offenses such as tax evasion and fraud. IRS is a large and complex agency, but its ultimate goal is to ensure that taxpayers pay their fair share of taxes. Given its important role in tax collection, the IRS is often in the news. For example, during the 2018 tax season, the IRS faced criticism for delays in processing tax returns. Despite these challenges, the IRS remains an essential part of the U.S. Tax system.

What is an Audit?

IRS audits are conducted to ensure that taxpayers are complying with the tax laws. The IRS sends audit letters to notify taxpayers that they have been selected for an audit. IRS audit letters can be fake or a scam, so it’s important to know how to identify one.

Audit letters will usually include the following information:

• The reason for the IRS audit
• A list of the documents that the IRS needs to review
• A date and time for the IRS audit appointment
• Instructions on how to prepare for the IRS audit

IRS audits can be conducted for a variety of reasons, but most commonly they are triggered by discrepancies between the information on your tax return and their records. For example, if you report income that the IRS doesn’t have on file, or if you claim deductions that seem unusually high, you may be selected for an audit. 

Mail Audit

IRS audits can be conducted in two ways: by mail or through an in-person meeting. Mail audits are less common, and they’re usually limited to correcting math errors or verifying missing information. In most cases, IRS audits are handled through correspondence, meaning that you will simply be asked to provide documentation to support the items in question. However, in some cases you may be required to meet with an IRS agent in person.

In-Person Audit

If the IRS decides to conduct an in-person audit, they will notify the taxpayer in writing and schedule an appointment. During the audit, the IRS auditor will review records and ask questions related to the tax return. The auditor may also request receipts or other documentation to support deductions or income items. The IRS will also look at your overall tax history to see if you’ve been accurately reporting your income and deductions in the past. If the IRS finds that you owe additional taxes, you’ll be required to pay the amount owed plus interest and penalties.

In some cases, criminal charges may also be filed.  With a little preparation, most audits can be resolved quickly and without incident. Audits can be stressful, but it’s important to remain calm and cooperate with the auditor. If you keep good records and cooperate with the IRS, they shouldn’t cause too much stress. It’s important to be honest during an audit and to keep calm – remember, the IRS agent is just doing their job!

What to do if You Receive an IRS Audit Letter

If you are selected for an IRS audit, it is important to remain calm and take a few deep breaths. Being audited does not necessarily mean that you have done something wrong. It simply means that the IRS needs more information about your tax return. The IRS can choose to audit your return if they think there is a discrepancy, or if you’re selected at random. They audited approximately 1% of all tax returns in 2018, so if you’ve been selected for an audit, know that you’re not alone.

The first step is to gather all of the documentation that the IRS has requested. This may include bank statements, receipts, and canceled checks. Once you have collected all of the necessary documents, you should review them carefully to make sure that everything is in order. If everything looks correct, then you can send the documentation to the IRS and wait for their determination. However, if you notice any errors or discrepancies, it is important to address them as soon as possible.

The sooner you take action, the more likely it is that the IRS will be lenient in their findings. If you need help with this, take your audit letter and the requested paperwork to an experienced tax attorney to help you through the process. 

How to Identify IRS Scams

If you receive an IRS audit letter, please contact your local IRS office to confirm that it is legitimate. Do not provide any personal information or financial documents to anyone who contacts you claiming to be from the IRS. IRS audits are conducted by IRS employees, not private individuals.

IRS audit scams can take many forms. Scammers may contact you by phone, email, or mail and claim to be from the IRS. They may threaten you with arrest or deportation if you don’t pay them money. These scammers may also demand that you pay using a prepaid debit card or wire transfer. If you receive any type of communication from someone claiming to be from the IRS, please contact the IRS directly at 1-800-829-1040 to verify its legitimacy. Do not provide any personal information or financial documents to anyone who contacts you claiming to be from the IRS.

If you receive a phone call from someone claiming to be from the IRS, beware – this could be a scam. The IRS will never contact you by phone about an audit. They will only communicate through written correspondence.

Another red flag is if the letter requests personal information like your social security number or bank account numbers. The IRS will never request this information in an initial contact letter. They may request it during an audit, but only after you’ve been given the opportunity to speak with an IRS representative.

Conclusion

If you receive an IRS audit letter the first thing you should do is identify whether or not it is legitimate. Check the address, envelope and contents to determine if it really came from the IRS. If you are still in question or confused about your letter, give them a call and ask them to verify the audit. Remember, multiple people get audited by the IRS. It doesn’t mean that you are in trouble or did anything wrong, you could have just been chosen at random. Don’t stress too much. As long as you have all your information in order then it will be an easy process. Just make sure to verify your letter to avoid a scam and never give out your personal information, especially over the phone. The IRS will never ask you for this information because they will already have it. 

Nobody wants to experience being audited by the IRS. But now if you happen to receive a letter in the mail you will know how to identify and respond.