Due to IRS budget cuts, it may seem logical for Georgia residents to believe that audit rates are lower. In 2011, those who made more than $1 million had a one in eight chance of being audited. Today, someone who makes more than $1 million has a one in 13 chance of being audited. However, the audits that are conducted today are being conducted at an expedited rate of speed.
In the past, a taxpayer would receive an Examination Letter, which is informally referred to as a 30-day letter. Taxpayers would have 30 days to reply, and they would receive a Notice of Deficiency if the response failed to address the concerns of the IRS. The Notice of Deficiency is referred to as a 90-day letter as taxpayers have that amount of time to reply. Receiving such a tax notice is an indication that a case is going to court.
While taxpayers have ample time and ability to defend themselves against an IRS notice, it is important to keep track of when these letters are sent. Additionally, these letters must be sent by certified mail, which may assist taxpayers in determining when a response is due. The IRS must also put the deadline to respond prominently on the first page of the notice.
Taxpayers who have received a notice of an upcoming audit may wish to talk to an attorney who has experience in audit defense as soon as possible. Doing so may make it possible to respond to the IRS in a timely and satisfactory manner. In some cases, a well-prepared response can resolve a case in a manner favorable to the taxpayer.