Correspondence Audit

A correspondence audit is done by mail. The IRS sends you a letter either alleging you forgot some item of income or requests to see the documentation to substantiate a deduction you have taken on your tax return. The most common type is the CP2000 notice, a computer generated notice that you failed to report an item of income. These must be checked closely since the reporting agency, often time the Social Security Administration for W2's, can make typographical errors. If you fail to properly dispute these errors the IRS is free to assess and collect the tax they believe is owed. And if ignored long enough, your only recourse is to pay the tax, penalty, and interest and then sue the IRS in court, an expensive proposition.

See Also:

• Installment Agreement;
• Offer in Compromise (OIC);
• Payroll Taxes;
• Trust Fund Recovery Penalty;