IRS Letter 2205A states at the beginning, "Your federal return for the periods(s) shown above has been selected for examination". The IRS uses Letters 2205-A to inform you of an audit. It also gives you the agent's name, phone, fax & office address. Put all this contact information in your cell phone so you'll know who is calling and you'll have their particulars when you're away from your papers.
Letter 2205-A is for Individuals. Letter 2205-B is for Businesses. (See examples below). The IRS designed Letter 2205-B specifically for S Corporation audits. Because your S Corporation profits & losses are linked to your personal tax return, the IRS will be investigating both your company & you.
They usually ask for more information from you than they really need but you also have a duty to present your case adequately. The IRS is generally suspicious of losses claimed. If you have a loss, they will review your basis in the company as well as your lifestyle.
Steps for IRS Audits
The IRS might have checked the boxes at the bottom of Letter 2205-A to inform you what the issues are being reviewed. But more often, the IRS will have sent a Form 4564 or Form 886A to ask you questions and request documents. Click on the links to review the Form 4564 or Form 886A to determine the next steps!
The IRS often wants bank statements & other income papers. But more often, they reject your deductions with little or no explanation. The evidence you will need is more than just a few cancelled checks or even an accounting software program or printout.
Each element of your case has different evidence requirements. It must be proven in the format requested by the IRS or your case will be rejected. The TaxHelpLaw Attorneys designed the TaxHelpAudit program to get you prepared so TaxHelpLaw can advocate for you!
Legal advice is recommended. However, you don't always need full-scale legal representation. If you wish to consult with a tax attorney for guidance or legal representation, please follow the Audit Prep Steps and contact our firm.
Respond to Letter 2205-A
But, someone must prepare your records. The IRS will not review them if they are not prepared in the proper way. You can't just give them cancelled checks or an accounting system. An IRS investigation can be substantial and requires more evidence. Plus, every piece of evidence to support your case must be presented in a specific format or it will not be accepted.
You can compile this evidence or you can hire a bookkeeper, CPA or an attorney at a cost. But it is wise for you to prepare the records yourself since you are most familiar with your business. You also have access to all bank information & can obtain evidence more effectively than any bookkeeper, CPA or attorney.
So, you need guidance to prepare the records accurately & correctly. The IRS won't tell you how to do this. Look at their completely worthless "tips" on preparing for an audit!
Self-Prepare:
So, if you want to save money & self-prepare for the audit, the TaxHelpAudit.com website is designed to get you ready for the IRS with videos, audio & text. Every line of every common IRS form is covered & attorney tactics against the IRS are explained in detail.
It is worthwhile to self-prepare your files, even if you hire a lawyer to represent you. You'll save time & money. And, you'll be prepared for the IRS!
To see how the TaxHelpAudit Programs work see our Solutions page!
If the issues are related to Schedule C, Form 2106, or Schedule E or a business problem please follow the TaxHelp Business Edition Prep Steps. If the issues are related to Form 1040, Schedule A, Schedule B, or Schedule D, please follow the TaxHelp Individual Edition Prep Steps.
Lost Documents
You may wish to avoid an IRS audit because you didn't keep your records. Maybe your records are lost or unavailable. However, unless you only used cash, your finances can be re-created. Also, even if cash was used, we can review bank records & credit card records for guidance. Also, affidavits can be obtained or we can use industry standards to arrive at a reasonable figure. See Lost Documents.
Attorney Advice:
Of course, at any time you may follow the Prep Steps & contact Mr. Hopkins at TaxHelpLaw for attorney guidance!
