Levins Tax Law
Schedule your initial consultation:

Experienced and Trusted
Representation From A Tax
Attorney And Former IRS Agent
And "BIG 4" Tax Partner

Photo of Attorney Gerard J. Levins

IRS audit letters: What you need to know

On Behalf of | Apr 29, 2022 | Internal Revenue Service

Each year, every US citizen is required to submit their tax reports to the Internal Revenue Service (IRS). You end up either owing money or requesting a refund. 

After tax day, the IRS analyzes the submitted reports, and often, that’s it. But if the system finds disparities in your report, it may issue an audit letter.

IRS auditing can be a worrisome affair. However, it doesn’t automatically translate to a debt owed to the IRS — you could still be eligible for a refund.

What triggers an audit?

You may be wondering: what mistakes or situations lead to auditing by the IRS? The Discriminant Inventory Function (DIF), an IRS computer system, detects irregularities in tax reports, like duplicate information or deductions and credits that don’t look normal to the tax filer.

Some common situations that trigger audits include:

  • Your earnings are a lot: The IRS agents will primarily focus on high-income earners, especially if they are confident the taxpayer owes money and that there’s a high possibility they can collect that money.
  • You overlook earnings: Any W-2,1099-K (reporting side jobs that generate income), 1099-INT (showing taxable interest of $10 or more in bank accounts) must be submitted to the IRS. If you fail to report any of these income sources, the IRS may audit you.

First notice

The first letter you receive after the IRS finds inconsistencies in your taxes will explain these inconsistencies. The IRS will note in this communication that it wants to review the records with you. It’s advisable to contact the IRS immediately if you receive this letter.

Second notice

Sent between two to four weeks after receipt of the first letter, the second letter will inform you of an appointment that you will be required to attend if you ignored the first letter. The IRS will assess all the financial documents and obligation paperwork submitted during this meeting.

If you ignore the second letter, the IRS will likely take legal action against you.

What happens when you don’t cooperate with an IRS audit?

If you refuse to respond to IRS audit notices, you could face severe repercussions. It’s within the IRS’s jurisdiction to collect the debt you owe. It can, therefore, freeze your assets, withhold your wages to cover the debt, prosecute you or file claims against you.

If the IRS issues a summons and you turn a blind eye to it, you could be held in contempt of court and even face jail time. 

Don’t disregard IRS audit letters, hoping the problem will resolve itself. Avoid the back and forth by contacting the IRS immediately you receive a letter.


FindLaw Network