Right here’s a irritating situation that affects means too many Individuals this tax season: You’ve been ready months and months for a refund, however as an alternative of getting a examine from the Inside Income Service (IRS), you get a letter saying “it is advisable ship supporting documentation.” Even worse, the IRS says it’s holding your refund till the matter is resolved.
Welcome to the annoying world of correspondence audits. Whereas general the variety of tax audits has declined in recent times, correspondence audits—principally a low-level audit that requires a comparatively straightforward repair—nonetheless make up the overwhelming majority of audits initiated by the IRS in any given yr. They will occur for quite a few causes, together with what the IRS calls “questionable refunds.” These audits are sometimes associated to the Earned Earnings Tax Credit score, which is granted to taxpayers who make beneath a sure amount of cash.
Sadly, many correspondence audits are by no means resolved, which suggests many taxpayers lose out on this credit score. In response to a recent report by the Taxpayer Advocate Service, greater than 94,000 correspondence audits stay unresolved from the 2019 tax season.
An audit letter ought to let you know precisely which supporting paperwork it is advisable ship, and you’ll usually get 30 days to take action. It’s necessary to not ignore this letter as a result of, because the TAS factors out, the company “is not going to make a second contact.” The following letter you get could be a Discover of Deficiency, and also you don’t need a type of.
There’s a bit of excellent information right here: In response to the newest weblog publish from the Nationwide Taxpayer Advocate, the IRS is rolling out a web-based tool that may permit audited taxpayers to add their supporting documentation with their cellphone or pc. (Presently, the one option to ship the documentation is by mail or fax.) The Document Add Tool, because it’s known as, is not going to solely make it simpler for individuals to ship their paperwork, however it’ll make the entire decision course of faster—which means you’ll get a refund sooner in the event you’re owed one.
“It permits taxpayers to add paperwork in actual time, permitting an IRS worker to debate the paperwork with the taxpayers,” the weblog publish states. “If a taxpayer has an open correspondence examination audit, she or he ought to inquire with the examination phone assistors to find out it the tool is obtainable for their case.”
The tool must be obtainable “later this month.” The weblog publish incorporates different useful data for individuals who have obtained a correspondence audit letter, together with the way you might be able to focus on your challenge with the IRS by a safe messaging system, fairly than utilizing the cellphone, which has not labored so properly for most individuals this season.
Take a look at the weblog publish here.