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How to Handle IRS Document and Information Requests
How to Handle IRS Document and Information Requests
Dealing with the IRS can be intimidating. When you receive a letter or notice from the IRS requesting documents or information, it’s important to respond promptly and completely. Here’s a helpful guide on understanding IRS notices, your rights and responsibilities, and steps to take when responding to information requests.
Understand the Notice or Letter
The first thing to do upon receiving an IRS letter is to understand what it is requesting. Notices from the IRS will have either a CP or LTR number in the top or bottom right corner. This identifies the specific notice type. The IRS website provides information on many common notice types so you can understand the purpose of the letter or notice.
Some key things to look for in understanding an IRS notice:
- Reason for the notice – is it requesting more information for an audit or processing a return, proposing changes to your taxes, or notifying you of a penalty?
- What response or actions are required by you and by what date
- Is any follow up needed with the IRS to clarify the notice or request an extension for responding
You may need to read through the letter carefully multiple times to fully understand what the IRS is requesting. Don’t ignore it – lack of response could lead to further IRS enforcement actions.
Review Requested Information Thoroughly
Once you understand what information the IRS is requesting, thoroughly review what you need to provide. Make sure you have all documents and records they are asking for. The IRS may request:
- Tax returns
- Receipts for deductions or credits claimed
- Bank and other financial statements
- Business operational information such as invoices and inventory records
You may need to contact your tax preparer or accountant to help gather everything. For businesses, alert employees who handle records so they can start compiling what is needed. Don’t ignore or delay – move quickly to gather everything within the timeframe given.
Understand Your Rights and Responsibilities
When responding to an IRS inquiry, you have certain rights you should understand, including:
- Right to professional and courteous treatment by IRS employees
- Right to privacy and confidentiality for your tax information
- Right to know why the IRS is requesting information and to receive an explanation
- Right to retain representation such as a tax professional to assist you
You also have responsibilities, like:
- Obligation to respond to IRS requests in a timely manner
- Responsibility to provide complete and accurate information
- Expectation to comply with tax laws and requirements
Don’t be adversarial with the IRS. Be professional in your communications and provide what they need. Extensions can sometimes be requested if you need more time.
Take Next Steps Based on Notice Type
Your specific next steps will depend on the type of IRS notice and information request:
Audit Notices
For a notice about an IRS audit, you will need to gather the requested documentation and prepare for the audit examination. Make sure to organize records clearly for the auditor – this will help avoid delays. You or your representative may need to meet with the auditor and answer questions. Take time to understand the issues the IRS has with your return so you can properly address their concerns.
Adjustments to Your Tax Return
If the notice proposes changes to your tax return through additional tax, penalties or interest owed, you should determine if you agree or disagree with the changes. You may need to file an amended return or claim for refund. If you disagree, you can communicate this and provide substantiation. Consider hiring representation to help resolve tax adjustments.
Requests for Information
Besides audits, the IRS may request information related to an ongoing investigation or tax matter. Provide complete, accurate records related to the request. Stay focused on the specific information requested rather than sending unnecessary documents. If needed, file a Freedom of Information Act (FOIA) request for additional IRS records.
Seek Assistance if Needed
Don’t be afraid to seek help in responding to the IRS, such as from a tax professional, attorney or federally authorized tax advocate. They can help make sure you understand what the IRS is requesting, gather information, and communicate with the IRS on your behalf. This can give you confidence that your rights are protected and responsibilities fulfilled.
Dealing with the IRS can seem intimidating and burdensome. By understanding notices quickly, responding completely, and seeking assistance if needed, you can manage IRS information requests efficiently. This helps resolve tax matters and avoid future problems.
References
Understanding Your IRS Notice or Letter
Got a letter or notice from the IRS? Here are the next steps
IRS Audits: Records We Might Request
11.3.35 Requests and Demands for Testimony and Production of Documents