IRS Audit Results in a Refund!

In March 2023, Dave received a notice from the IRS regarding errors on his Schedule A deduction. The letter informed Dave that he owed $20,000 due to inaccurately reported gambling winnings and losses on his 2021 tax return. Dave was shocked because he had never received a notice from the IRS before and couldn’t believe he owed that much! Fortunately, Dave remembered that he had purchased TaxAudit’s Audit Defense for the year of his notice. He immediately called the customer service department to report the audit and was connected to Roni, one of our world-class customer service representatives! In this initial call, Roni informed Dave about the next steps of the process and reassured him that he was in good hands. 

A few hours later, Dave's case coordinator, Justin, called and introduced himself. During this initial call, Justin requested that Dave send a copy of his IRS notice and the tax return in question so that the case could be transferred to one of our tax professionals. That same day, Dave uploaded the requested documents and sent them to Justin. Once received, Justin informed Dave that his tax professional would contact him shortly. 

Just a few days later, Dave’s tax professional, Brent, contacted him, and the two discussed the notice and the next steps of the process. During the call, Brent mentioned that he had noticed Dave reported his gambling winnings but had not reported any losses. Brent asked Dave if he had any gambling losses in 2021, and Dave confirmed that he did have significant losses that year. Brent told Dave that he could claim gambling losses on his tax return, up to the number of winnings reported. Brent then requested that Dave provide a spreadsheet of gaming losses, obtain a report of gambling losses from the casino, and submit bank statements.  

Before the call ended, Brent discussed both the best-case and worst-case scenarios with Dave. He informed Dave that, based on the current calculations, he would be responsible for paying additional taxes to the IRS – in the best-case scenario, Dave would owe the IRS almost $3,000 since he did not have all the documentation needed to support his case. However, Brent reassured Dave not to worry. Brent emphasized his commitment to using his knowledge and expertise to explore all options to find the best possible outcome for Dave’s situation. He also mentioned that he would keep him informed throughout the process and handle all communications with the IRS on Dave’s behalf. If Dave owed tax, Brent would explain why and outline the available payment options. After all this reassurance, Dave felt relieved that he had purchased Audit Defense. He appreciated having a great tax professional to help him through the process and not having to handle the notice alone.  

 A few days later, Dave submitted his bank statements and noted gambling losses on a spreadsheet. He also informed Brent that the casino was unable to send him proof of gambling losses. However, Dave confirmed he was comfortable proceeding without the casino documentation. Brent informed Dave that without the casino's report, Dave would need to submit an amended Schedule A form to the IRS with the adjustments he was claiming. Brent also explained that in the future, it might be beneficial to keep a log of all winnings and losses throughout the year.  

Dave quickly submitted the revised Schedule A form to Brent, who prepared the IRS response. After that, Brent forwarded the response to the quality control department, who reviewed and approved the documentation before sending it to the IRS. Brent informed Dave that the response had been sent and, due to IRS processing times, it might be a few months until they received a response. Brent continued to check on the status of Dave’s case, keeping him updated and routinely following up with the IRS. 

After a few months, Brent received a response from the IRS with fantastic news to share with Dave—the IRS was going to issue him a $3,000 refund, which was even better than the best-case scenario! 

Our tax professional, Brent, made this outcome possible. His knowledge and dedication helped him resolve the case, turning a $20,000 bill owed to the IRS into a $3,000 refund!