In November of 2020, TaxAudit member, Victor, received a letter from the IRS. The letter he received was an IRS Letter 3451-A, which was looking for supporting documents to substantiate alimony deductions taken on his tax return. After contacting our Customer Service Department and sending all of the documents to his Case Coordinator, Victor was assigned to a Tax Professional to handle his IRS audit.
After an introductory call, Victor’s Tax Professional laid out the type of documentation that would be needed to respond to the IRS. Victor’s Tax Professional worked with him to gather bank statements, alimony checks, insurance premium information, along with additional supporting documents. Once all the necessary documents were gathered, Victor’s Tax Professional called to discuss the best-case and worst-case scenarios for the notice. The initial notice had a proposed amount due of over $70,000. In the best-case, the IRS would accept all the documents provided and would issue a no-change to the tax return, meaning he would not owe anything. The worst-case scenario would be that the IRS accepted some of the documentation with a balance still owed of $27,000. Victor’s response was sent to the IRS and the waiting game began.
With the pandemic, the IRS had fallen behind in their time to review correspondence – so while responses from the IRS typically take a few months, it can now be upwards of 6-8 months for responses and resolutions. But throughout the waiting process, Victor was updated of the status, given regular reports from his Tax Professional about check-ins with the IRS, and told to notify TaxAudit if he had received any correspondence from the IRS. After a few months, Victor received a letter from the IRS requesting additional time to review the response package that was sent in. These notices, typically referred to as stall notices, were sent a few times, continually pushing out the date, and finally, after seven months of waiting, a new notice was issued to Victor confirming the IRS had reviewed the response TaxAudit had sent in.
Unfortunately, they had rejected the response and issued the worst-case balance due of $27,000. Instead of panicking, Victor sent a copy of the notice to his Tax Professional to review. She let him know that the IRS was incorrect and, due to the excellent documentation that was provided by Victor, that we were going to do what we needed to prove that the credit he made on his tax return was correct.
A phone call was made to the IRS examiner to discuss the new notice. After a chat with the examiner, a second response was formulated and sent to the IRS, once again disputing the claim that the taxpayer had a balance due. As with the first response, Victor received another stall letter requesting additional time to review. Throughout the entire process, Victor remained patient and waited on the guidance of his Tax Professional to get him through this lengthy process.
Once the time on the stall letter had been reached, Victor’s Tax Professional called and spoke to an examiner at the IRS again. Over the course of the phone call, she had confirmed that the IRS had accepted the second response sent and would be issuing a no-change letter to Victor. This meant he did not owe anything! To confirm, Victor’s account transcript was pulled and the $0 balance due showed on his account!
The entire process took just about a year, but through the diligence and steadfast support of Victor’s Tax Professional, he achieved the best-case scenario. At the conclusion of his case, he had this to say:
“Of course, being audited is very stressful and nothing anyone can do will make it stress-free! I appreciate my TaxAudit professional sticking with me the whole way, reassuring me, and letting me know exactly what was needed from me, as well as handling all communication with the IRS. I travel most of the time for work, so being able to submit documents via the portal was great.”
*Some names and details have been changed to protect the privacy of members.