The IRS now sends more than 201 million notices a year. Don't fear the IRS.
If you get an IRS Notice, it needs to be responded to in a timely manner.
The Government Accounting Office "audits" the IRS every year. On average, the GAO finds about two of every five IRS Notices are wrong.
It's not always IRS's fault. Sometimes they get information that is not correct or is not complete.
An example is when you failed to report the sale of a stock. The IRS Notice will show a big balance due because it doesn't know the cost you paid to buy the stock. If you file and Amended return, form 1040X, and claim the cost of the stock, the amount owed to IRS will be reduced. If it resulted in a loss that you did not claim on the original return, it could even result in a small refund to you.
IRS reports the audits they do by mail are up 143 percent. One of our clients endured an office audit on the 2009 return. The "no change" letter was a relief for our client.
And IRS office and field audits are reported to be up 65 percent.
A big increase in IRS notices for underreported income is showing 290 percent increase.
Almost all of our clients have signed an authorization form 2848. That means the IRS notices, letters, etc. are supposed to be sent to the client and to us. That form authorizes us to talk with IRS regarding that client and to advocate the client's position. Usually it is just a matter of understanding the question and sending a timely explanation.
That authorization also allows us to get a transcript of the IRS records by email.
The copy of the IRS notice or letter that is sent to us allows us to see what it is about and to begin to prepare a response. The quicker the response, the fewer follow up notices are sent. That allows us to help our clients have peace of mind and sleep better at night.
It is always easier to respond quickly than waiting until many notices have been sent by IRS.
I went to a high school reunion in Evanston, Wyo., a few years ago. One of the ladies there said "John, I get your letters all the time. I work at IRS in Ogden (Utah)."
Did you hear, "Never squat while wearing your spurs?" by Will Rogers.
• John Bullis is a certified public accountant, personal financial specialist and certified senior adviser serving Carson City for 45 years. He is founder emeritus of Bullis and Company CPAs, LLC.