Nina Olson, the National Taxpayer Advocate discusses Internal Revenue Service (IRS) audits or examinations.

The Automated Underreporter Program is where the IRS uses computers to examine tax returns for errors, omissions or other areas that may require further examination by the IRS. Each year your employer, banks, investment brokers, finance companies and others report to the IRS income you have received. The IRS compares the information reported on your tax return to the amounts reported by these third parties to the IRS. Where the information reported differs from your tax return, your return is often flagged for IRS audit or examination.

In response to discrepancies, errors and omissions reported on your return, the IRS will often send you a Notice CP-2000 which explains what discrepancies were found and usually a change in tax, penalties and interest as proposed by the IRS.

Each letter usually has a deadline date to reply. If you do not respond to the letter, the IRS will usually adjust your tax return to reflect the proposed changes and send you a bill for additional taxes, penalties and interest that may apply. If you agree with the proposed changes, there is no need to amend your tax return. Simply sign, date and return the letter with the proposed payment.

If you don’t agree with the proposed changes, you have the right to respond with the information in support of your position or request a meeting appealing the IRS decision securing your rights as a taxpayer.

The Taxpayer Advocate Service (TAS) is an independent organization within the IRS. The TAS provides assistance where a taxpayer has otherwise exhausted all normal procedures in resolving a tax matter. If you have not proceeded in resolving your tax problem through normal means, you cannot request help from the TAS.

Dealing with the IRS can sometimes be a very difficult and demanding process. In many  IRS cases, taxpayers are recommended to hire a tax professional who is licensed, experienced and knowledgeable in tax law, accounting and IRS procedure. Having an advocate on your side can sometimes make all the difference between a successful outcome and not having a successful outcome at all.