Do you know what the IRS has on file for you? Many of us have no idea. If you have filed taxes then you know they have the information that you sent with your tax returns. However, some taxpayers are surprised to see how much or even how little the IRS actually knows about them when they do review their files.
You should know that anybody who pays someone and issues a 1099 or W2 would need to send a copy of that form to the IRS. This means that even if you forgot about a payment made to you by that individual or company the IRS will not forget that income. Even if you didn’t receive the 1099 form at tax time and/or did not claim that income on your taxes the IRS will still be able to see the discrepancy in your file.
The IRS has sophisticated ways of finding out information on taxpayers that they are looking for. They can subpoena bank records to see if large amounts of money have been deposited. If they are auditing you and find that what is being deposited in your bank accounts seems excessive over your claimed income then you can be positive they will have questions.
Even if the IRS does not have the above methods to determine your taxable income they can conduct what is called an indirect audit. To do so they will determine how much it costs you to live in a year. By looking at your expenses they can determine what you must have as an income to meet those expenses.
Unfortunately, it is also possible that other individuals or businesses who believe you were or are doing something wrong in regards to filing your taxes can make reports to the IRS about the issues. Even if these accusations are false they can become a problem. Such reports could be put in your file or they may be the very catalyst of an audit that you will have to face. Either way it is a good idea to find out if any such reports exist.
Along with tax return transcripts and a tax account transcript the IRS may have other documents that can reveal to you what information they have collected. If you are being audited the IRS is required to create an audit report. Any assertions they have against you will need to be documented in that report along with the reasons behind the assertions. If the assertions in the report are false then you will need to go through the process of showing why they are incorrect. If they are true then you will need to be prepared to face the assertions in the best way for your situation.
Taxpayers have a right to look at what the IRS has in their file. Even if you are not being audited it may be a good idea to see what information has been collected about you. If you are worried about past tax debt or known tax problems then it is absolutely essential that you review your IRS tax file as soon as possible.
If you decide to request your tax file to review it is best to have an attorney who understands how the IRS works assist you. An attorney requesting a taxpayers record will not raise any red flags against the taxpayer. They also will have experience reading these documents, will be able to understand any coded items that the file may contain and they can fully explain to you what is in the file. They can also help you correctly deal with any issues that exist due to misinformation or mistakes that were made either by you or the IRS. Facing the IRS can be stressful but you do not have to do it alone. If you would like to review your IRS file, are facing serious tax problems or are fearful of IRS tax debt that you may have then we encourage you to contact us for a free and confidential consultation. https://www.myirsteam.com/irs-problems/irs-tax-investigation/
