In its quest to "touch" more citizens with the tax enforcement process in a more efficient manner, the IRS is significantly increasing its correspondence audit program.

The number of IRS correspondence audits has increased over 285%, growing to more than 1,400,000 last year.

The correspondence audit is a significant element of the IRS's audit arsenal and can only be expected to grow-and quickly-given the current Administration's desperate need for cash.

The correspondence audit is nothing more than a mail-order audit. The process involves the IRS mailing a letter notifying you that you've been selected for audit then asking that you provide by return mail certain documents and information to verify the questioned items in the return.

This all seems harmless enough. In fact, when properly handled, the correspondence audit is generally a more preferable way to handle an audit than the face-to-face examination.

You don't have to take time away from work or family to meet with an IRS agent whose job is to get into your pocket and take your money. Even more importantly, the correspondence process generally does not involve open and flagrant attempts to threaten and intimidate citizens into accepting audit results that are just plain wrong.

As with all audit decisions, correspondence audits are subject to the same rights of appeal as any other audit.

That's the good news (you knew there was a "but" coming, didn't you?!)...

But the problem is that most people simply do not know how to handle any kind of audit, correspondence audits included. When people receive notices and demands from the IRS, they often don't respond or they respond incorrectly. (Unfortunately, too often even paid tax professionals don't respond correctly.) Add to that the plain fact that most people are afraid of anything to do with the IRS.

All this leads to audit assessments that are just plain wrong and taxpayers end up paying more taxes than they owe.

IRS's audit results are wrong between 60% to 90% of the time, depending on the issue.

It's not until the IRS begins enforced collection action, through wage or bank levies and the filing of tax liens, that people get shocked into taking some action to resolve the problem.  And by then, the nightmare has already started.

Page 1 2 Next »