If you've received a copy of IRS Audit Letter 950 in the mail, you might think that you are required to remit the balance due stated on the form. Actually, you have the right to reexamine your tax records and file a tax appeal if you have legal grounds to do so. However, you should take time to understand the audit letter and to speak with a qualified tax audit expert beforehand.
What is in Audit Letter 950?
Audit Letter 950, which is called a "30 Day Letter Straight Deficiency or Over Assessment", is used to inform a taxpayer of an increase or decrease in his or her tax liability. This letter is only sent after an IRS audit has been completed, so if you've been notified of a pending audit, you may not receive a letter like this until the audit has been done.
While audits have an extremely bad reputation, there are some taxpayers who end up with lower tax bills after an audit than they had before. In this case, your Audit Letter 950 would contain news of an "over assessment", which means that the IRS had originally assessed your tax liability to be higher than it is. If you find out that your tax liability is higher than it was before the audit, it's called a "deficiency", because it means that the amount of tax you previously paid was inadequate to cover your liability.
What Should You Do if You Receive Audit Letter 950?
On the notice, the IRS explains what action you are expected to take after receiving Audit Letter 950. Taxpayers have two options: they can either sign the enclosed agreement form and return it to the agency or they can file an audit appeal. Those who wish to file an appeal must do so within 30 days of receiving the notice. While some may decide not to return the agreement form, they automatically lose their right to appeal the audit findings after the 30-day window expires.
What to Do If You Disagree with the Audit Findings
What can you do if you disagree with the tax liability the IRS says that you owe? If you decide to file an appeal of your audit, you should never do so on your own. The first thing you can do is reexamine your tax records to see if there is any legal standing for your objection.
If you cannot find anything that supports your claim, it's wise to talk with a qualified tax expert who can assist you with an audit. Get a tax attorney or an Enrolled Agent to help you. A seasonal tax preparer generally does not have the expertise required to deal with this situation.
The way you respond to an IRS Audit Letter depends on your personal situation. Make sure that you understand the entire form and your individual audit results before you decide on a course of action.
