Typically, the IRS selects some tax returns for additional review to determine if they are accurately reported. The taxpayers whose returns have been selected receive audit letters informing them of the review process.
Receiving IRS audit letters and notices in your mailbox can be scary. However, before you become anxious, make sure you understand exactly what the letters are asking from you. In some cases, it is very simple. This post covers the common letters and notices that the IRS sends to taxpayers who are under audit.
IRS Letter 2202: Initial Contact Letter for Audit
If your federal income tax return is selected for examination, the IRS will send you IRS Letter 2202 or Initial Contact Letter for Audit. The letter you received notifies you that your tax return has been chosen for an audit review.
The IRS auditor is requesting that you attend an appointment for the audit. If you are unable to make it on the assigned date and time, they will request that you call to reschedule. During the appointment, the IRS expects you to provide documents supporting specific items on your tax return that need to be verified.
IRS Letter 718: Self-Employed Initial Contact Letter for Audit
IRS Letter 718 is the initial contact letter for correspondence audits related to self-employment tax. The letter informs you that your return was selected for review. It includes a list of reported items on your tax return as well as missing items that triggered an audit.
IRS Letter 566: Initial Contact Letter for Audit with Request for Additional Information
The IRS audit process starts with IRS letter 566. As mentioned earlier, the IRS reviews a percentage of tax returns to identify common and frequent errors such as mismatched reporting or unusual variations in returns.
If the IRS identifies these errors in your return, it will send you a 566 letter requesting additional information.
Examples of errors that might generate a 566 letter include:
- Taking a credit this year that you have not historically been taking and vice versa.
- Higher or lower than a normal current deduction for auto expenses or charitable contributions this year compared to previous years.
- Business income on Schedule C that does not match the income reported in forms 1099-MISC and/or 1099-NEC.
Other initial contact letters for audits with requests for information include:
IRS Letter 566S
The IRS Letter 566S is a tax audit notice informing you that your tax return is under audit, and your response is required to support specific items on the return. This letter details the documents you need to make claims or earn credits. These include Form 886-H-EIC, Form 886-H-HOH, Form 886-H-DEP, and Form 886-H-AOC.
IRS Letter 566E
This letter informs you that the IRS selected your tax return for an audit and that it is requesting you to provide documents proving your eligibility to take one or more deductions or credits on your return, specifically Schedule E.
The IRS gives a 30-day notice deadline to submit the documents. If you miss the deadline, the agency will disallow some tax credits and deductions. Additionally, it may assess your return for additional tax, penalties, and interest.
IRS Notice CP75: Verify EIC, ACTC, or RRC for Audit
IRS Notice CP75 informs the taxpayer that the agency is auditing their tax return and requires supporting documents to verify the Earned Income Credit (EIC) they claimed. The notice also informs you that the agency will hold a portion of your Earned Income Credit (EIC), Additional Child Tax Credit (ACTC), and Recovery Rebate Credit (RRC) refunds until the audit is completed.
Should you claim the Premium Tax Credit (PTC), the agency will also take part of your refund.
The following are some of the other related CP75 notices:
IRS Notice CP75A
This notice informs you that the IRS is auditing your return and requires documentation verifying the Earned Income Credit (EIC), dependents you claimed on your return, and your filing status.
Read the notice carefully and provide copies of the requested documentation.
IRS Notice CP75D
The IRS sends this notice to inform you that they are auditing your tax return and need documentation that verifies your reported income and withholding.
The notice also informs you that the audit could make you ineligible to claim EIC, dependent, and other credits.
If you have received any IRS audit letters or notices, do not panic or ignore them. Go through the letter carefully to determine the additional information the IRS requires from you. In most cases, an audit notice requires basic documents or receipts that the IRS cannot access.
If you need help responding to audit queries, you can start online by answering 6 simple questions. We never charge for ‘investigations’ or consultations. You can also call us at 866-568-4593.
6 Simple Questions. Free Evaluation.
Join our Newsletter
Enter your email address to join our free newsletter. Get all the latest news and updates.