Audits and disputes

Audit representation

Standing in for you during an examination — correspondence with the IRS, the document requests, the meetings, and the scope of what does and doesn't get produced.

Most audits are correspondence audits: conducted entirely by mail, narrow, focused on one or two items on a return. They're far less dramatic than the word "audit" suggests. Office and field audits are broader and are where representation matters most.

Two things generally determine how an audit ends. The first is documentation — what you can substantiate. The second is how the communication is handled, because audits have a tendency to widen when answers invite further questions. Both are easier when someone else is doing the talking.

Audit reconsideration

The one people don't know about. If you were assessed because you never responded to the notices — never opened them, never knew, moved house, were dealing with something else entirely — that assessment may not be as final as it appears. Audit reconsideration allows a closed examination to be reopened where you never participated or where new documentation exists.

There are a lot of people paying, or being pursued for, balances assessed in their absence who believe the matter is closed. Frequently it isn't.

Innocent spouse relief

Filing a joint return makes both spouses liable for the whole amount, and that liability doesn't dissolve when a marriage does. Relief exists in three distinct forms, each with its own test — relief from an understatement you didn't know about, an allocation of the liability between spouses, and a broader equitable relief that can apply where the other two don't.

There's also a separate remedy, injured spouse allocation, for a different problem: when your share of a joint refund was taken to pay a debt that was only your spouse's. The two are constantly confused and they do completely different things.

One point worth knowing before you start: a divorce decree assigning the tax debt to your former spouse does not bind the IRS. The IRS wasn't party to your divorce. This is the single most expensive misunderstanding in this area.

Appeals

Taking a disputed determination to the IRS Office of Appeals, which is independent of the examination and collection functions. Denied penalty relief, a rejected settlement offer, a disputed audit result, or a collection action — most of these carry appeal rights, and most of those rights have deadlines attached.

Notice responses

Under-reporter notices — where the IRS's records show income that doesn't match your return — look like audits and aren't. They're automated matching, and they're frequently wrong or incomplete, particularly for anyone with 1099 income, investment activity or cryptocurrency.

If you're holding something with a date on it, that date is the most important piece of information you have. Read it to us before anything else.

How do I know if I'm being audited?

By post. The IRS opens an audit by mail — never by phone, email or text. If someone calls claiming to be conducting an audit and demanding payment, it's a scam. That's not caution, it's simply how the process works.

What triggers an audit?

A mix of automated scoring, document mismatches between what you reported and what third parties reported, certain deduction patterns, and some random selection. Being audited is not, by itself, an accusation.

Should I just handle a correspondence audit myself?

Sometimes, yes — a single-item request with clean documentation is often manageable. Where it gets risky is when documentation is incomplete, when the answer to one question invites another, or when the year under examination connects to years that aren't.

What if I don't have receipts?

It's a harder audit, not necessarily a lost one. Substantiation can sometimes be built from bank records, industry norms and other evidence, though the rules on what's acceptable vary by the type of deduction.

I was assessed years ago and never responded. Is it too late?

Possibly not. Audit reconsideration exists for exactly this — an assessment made while you weren't participating. It's worth having someone look at the transcripts before you accept that the matter is settled.

Am I responsible for my spouse's tax debt?

If you filed jointly, the IRS can pursue either of you for the full amount, regardless of whose income or error created it. That's what innocent spouse relief exists to address, and there are three distinct forms of it.

Our divorce decree says he's responsible for the taxes. Doesn't that settle it?

Not with the IRS. A decree binds the two of you, and it may give you a claim against your former spouse — but the IRS was not a party to it and is not bound by it. This surprises people constantly, and it's expensive.

Will the IRS contact my former spouse if I apply for innocent spouse relief?

Yes. The IRS reviews the request and then contacts your spouse or former spouse to ask whether they want to participate in the process. There's no version of this where they aren't told. If that raises a safety concern for you, say so at the start — it's relevant to how the request is prepared.

Do I have to work out which of the three types applies to me?

No. All three are requested on the same form, and the IRS considers each of them. Getting the supporting facts and documentation right matters considerably more than picking a category.

What's the difference between innocent spouse and injured spouse?

Innocent spouse relief is about not being liable for a balance arising from your spouse's return. Injured spouse allocation is about recovering your share of a refund that was taken to pay their separate debt. Different problems, different forms, frequently mixed up.

Can you represent me in Tax Court?

No. That requires an attorney or a non-attorney admitted by examination to the Tax Court. Katherine will tell you if that's where your matter is going and point you toward someone who does it.