How to Communicate with the IRS During Audits and Underpayment

An audit notification from the IRS is understandably terrifying. Knowing you can’t pay the taxes you owe is scary. The government is big. You are small. Reading the notice bring your blood pressure up and a sense of doom will probably wash over you. Remember, one way or another, you will make it through this audit or underpayment issue. Instead of dreading what is to come you should instead focus on how to do things right when dealing with the IRS. For some consumers the thought of dealing with Internal Revenue Service for any reason sets them on edge so much, they end up making easily avoidable mistakes that can cause harm to resolving the issue.

What to Do If You Can’t Pay or Get Audited

Here is an overview of what to do when you are trying to establish a good line of communication with the IRS whether through an audit or your inability to pay taxes owed:

Communicate Immediately

Not reacting to your IRS notice is not an option. When you know you owe money you cannot pay or receive correspondence you are facing an audit, get on the phone immediately. Do not ignore any communication your receive from the government. Doing so will only make the matters worse. Busy IRS agents do not want to spend their limited time tracking you down. As with many situations in life if you are honest and open about working together, you are likely to see better results. Don’t cause undue burden on the agent. Create a line of communication from the get-go that shows the agent in charge you are going to help your own cause.


Photo by Robert S. Donovan via Flickr

Be Polite

While communication is of the utmost importance, you also need to watch what you say. Too many tax debtors get defensive right away instead of remaining polite and optimistic about tax problem resolutions. The more you run your mouth, the more likely it is you are going to say something that hurts your case. Remember, you’re trying to build a rapport with the agent. Making their life easier enables them to do the same for you within their set of rules.

Stay Organized

You will not be helping yourself at all if you arrive at an audit disorganized and unfamiliar with your finances. If you owe the government money in back taxes, it is important to keep all correspondence relating to installment agreements and other information in one convenient, organized place. The more you know about your income tax return information, the better off you will be. Missing payments you owe on an installment plan or providing inaccurate figures at an audit can mean more red tape for you and the IRS to deal with. You would essentially be defaulting twice on the same debt by messing up an installment plan. Make sure you know how long to keep financial records.

Get Answers

Tax laws are complicated and just because you don’t understand everything going on doesn’t mean you should just give up. Ask the questions you need to know the answers to. You have a right to understand the audit process or how payment arrangements work. Speak up and educate yourself on the process you are about to go through. Write down the answers you receive and add it to your overall documentation.

Seek Assistance

If a tax debt or an audit scares you to no end, you may not be able to efficiently handle the situation on your own. This may be the right time to consult with a tax attorney or a licensed CPA who can help you work through the process. It may cost extra but you’ll be relieved that there is an eventual resolution to your tax situation. Of course if you haven’t paid taxes down to the IRS, you may not be able to afford professional assistance without going into debt. Weigh whether or not the debt is worth the relief you would receive by handing the issue off to a pro.

Meet Commitments

Some individuals will go through all of the processes and procedures for satisfying a tax debt or facing an audit situation and then completely fail to uphold their end of the bargain. Make sure you get all the information you need confirmed in writing then keep yourself organized to meet your obligations. The IRS will be fast to react if you don’t do as you promised to meet your financial or other tax obligations.

In case you still need more information, here is a real life example of how Barbara Friedberg dealt with her tax audit.

About the Author

By , on May 23, 2011
Tisha Tolar
Tisha Tolar is a co-owner of Trifecta Strategies, LLC and the author of Gen X. When she is not busy being a fiction writer, she writes personal finance articles for several web sites, including Moolanomy.com.

2013 Tax Center

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2013 Important Tax and Filing Dates

Leave Your Comment (2 Comments)

  1. @krantcents: The problem comes in with… if you haven’t paid your back taxes, you probably can’t afford representation. Right?

  2. krantcents says:

    One of my friends was a former IRS prosecutor, he told me that it helps to have representation. Your representative, if asked a question can always say I will check with my client. If you represent yourself, you lose that opportunity.

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