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IRS redesigns letters and notices

It’s never a pleasant experience to check the mail and find a letter from the IRS. Over the last decade, the use of IRS correspondence tax audits has skyrocketed.

A federal tax audit used to involve a face-to-face meeting with an IRS auditor at either an IRS office or the taxpayer’s home or office. The auditor was required to go over the taxpayer’s rights and explain the appeals process.

In a correspondence exam, a computer issues a letter and no one is actually assigned the case. The letter may ask for additional documentation or point out a mistaken calculation. The letter usually lists a contact name as Tax Examiner and the phone number of an IRS Service Center.

This post will discuss what some of the common letters mean.

Several of the newly redesigned notices generally do not mean good news. Form CP05 means the agency is reviewing your tax return and CP05A asks for additional documentation. A CP07 provides that a hold will go on your refund while a review of itemized deductions claimed on a Schedule A takes place.

Forms CP11 and CP12 (A, E and M) are balance due letters based on miscalculations. After an audit, Form CP22E will list the money that you owe because of changes.

The forms are not always sharing bad news. If your refund check is sent back to the IRS because of an error, Form CP31 asks for an updated address. In some cases, a taxpayer may request to have an overpayment applied to future estimated taxes and Form CP45 verifies this will happen.

The IRS hopes redesigned taxpayer correspondence will allow individuals to figure out what action they must take. However, there is no substitute for consulting an experienced tax audit attorney when you have questions.

Source: IRS.gov, "Understanding Your IRS Notice or Letter," accessed July 17, 2014.

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