IRS Letter 2202 states, "We have selected your federal income tax return for the year shown above for examination".
The IRS uses Letter 2202 to inform you of an audit, which is a Federal investigation of you. Letter 2201A has been discontinued. The IRS wants to ask you questions in your home, office or the IRS office. Because an audit is a legal process attorney guidance is advisable.
Page 3 of this Letter has boxes for the IRS to check when they are requesting various items. See if any of these boxes are checked. The IRS might also use Form 4564 or Form 886A to ask you questions. The Form 2201-A is often used for office audits.
Steps for IRS Audits
You will be required to respond to the items listed on the 3rd page of the Letter 2201A (or the Forms 4564 or 886A).
In this legal process you are required to prove every element of your case. It must be in the format required by the IRS or you will be rejected. It takes a lot of work, even if you have accounting software. You need to get organized & get legal advice. Each must be as cost-effective as possible.
Income Issues
Essentially to determine if you accurately accounted for your income & expenses on your tax return, the IRS will look at all your:
- bank account information,
- your business deductions & expenses,
- your Wage & Income Transcripts &
- your lifestyle
Call the Agent or the IRS at 1-800-829-1040 & request your "Wage & Income Transcripts". These documents contain all 3rd party records sent to the IRS on you. Your spouse (& children, perhaps) should order their transcripts as well. You can verify the entries on your return.
The IRS will declare all income in your bank account to be income unless you prove otherwise. You have to track all inter-bank transfers & other deposits that are not income, such as loans, inheritances, gifts, etc. Fortunately, the TaxHelpLaw Audit membership has an entire section devoted to "How to Prove a Deposit is Not Income", which shows you specifically what to get & say to the IRS!
The IRS will review your lifestyle & assets to roughly determine if it corresponds with the the income reported on your return.
Deduction Issues
The IRS will often reject insufficient or poorly organized records & offer little explanation for why or how you can repair them. The IRS is not allowed to give you legal advice or tell you how to arrange your records. You must give the IRS evidence of titles, insurance, bank statements, purchase documents, vital records, court records, etc., not just a pile of receipts or even an accounting software program. And, the evidence must be arranged in exactly the manner required.
So, most people lose because the don't know how to respond. Plus, the IRS will impose penalties on you for poor record-keeping and/or accuracy-related & negligence. Of course, interest is ever-growing against you. To avoid this result, the TaxHelpAudit Program shows you exactly what to gather & what to do for all IRS audits.
Don't let them intimidate you. Keep a direct course proving your case. Be extremely thorough with your documents.
Take Action
The first step is to determine which Schedule of your return is being questioned. Therefore, if the issues involve your Schedule C, Form 2106 or Schedule E please follow the TaxHelp Business Edition Prep Steps.
If the IRS questions are related to your Form 1040, the Schedule A, Schedule B, Schedule D or any other issue, please follow the TaxHelp Individual Edition Prep Steps. For all other issues, please prepare your case by reviewing the TaxHelp Audit Products before you respond to the IRS!
If no boxes are checked on page 3 of the Letter 2201A, the IRS will send you a Form 4564 or a Form 886A to ask questions of you. Please gather the form you received & compare it to the Form 4564 or Form 886A. Then, follow the TaxHelp Prep Steps to victory!!
To see how the TaxHelpPrograms work see our Solutions page!
Lost Documents
You may be concerned about your IRS audit because you didn't keep your records. Your documents may be lost or unavailable. However, unless you dealt solely in cash, bank records & credit card records can be re-created. Plus, even if you used a lot of cash, we can get affidavits or use industry standards to arrive at a reasonable figure. See Lost Documents.
Attorney Advice
At any time you may follow the Prep Steps & contact Mr. Hopkins at TaxHelpLaw for attorney guidance!
