The number of IRS “correspondence audits” has risen sharply in recent years. A correspondence audit is a type of tax audit that is handled in the following manner:
- The IRS sends taxpayer a letter questioning something on his/her tax return
- taxpayer responds by providing documentation that substantiates the figures on the original return
- the IRS then closes the case without making changes to the return, OR
- the IRS sends another letter asking for additional supporting documentation, OR
- the IRS proposes a tax change based on the information received
If the taxpayer disagrees with a tax change, he/she may appeal the decision. It is called a correspondence audit because it does not involve an IRS auditor banging on your front door.
Taxpayers naturally want to know what is going on with their case; whether or not their documents have been received, whether or not the documents they submitted are sufficient, ultimately whether or not their tax problem has been resolved. And in the past, the IRS has been slow to answer these questions.
But recently the IRS has made efforts to improve the correspondence audit process by something called the “Intelligent Contact Management System.” See TIGTA report. ICMS allows taxpayers to speak directly with IRS audit representatives rather than leave messages (under the old system) that were not being returned. However, even though taxpayers may be getting through to live operators and getting answers these days, the answer is still “not yet.” The audit process is still as slow as ever. TIGTA confirms in their report that ICMS will not do anything to actually shorten the correspondence audit process.
On a side note, it’s slightly presumptuous for the IRS to use the word “intelligent” in the name of one of its systems, dontcha think?