No more phone-initiated audits
TAX ALERT |
An internal IRS memorandum announcing a change in policy regarding how the IRS contacts taxpayers that have been selected for examination was publicized on May 31, 2016. The memo, dated May 20, 2016, directs IRS employees to initiate contact with taxpayers to commence an examination only by mail. Previously, a taxpayer was considered to be under audit from the moment telephone contact was initiated, regardless of whether the taxpayer and IRS employee spoke to confirm an appointment to commence the audit.
The change in policy comes in reaction to the continuing threat of phone scams, phishing and identity theft by fraudsters posing as IRS employees to steal sensitive taxpayer information. The change also follows complaints by multiple taxpayers during the recent Taxpayer Advocate Service public forum held on May 5, 2016, in Red Oak, Iowa. During the forum, taxpayers complained about phone-initiated audits and many expressed suspicion over the validity of such calls.
The change in policy also provides relief from confusion created by prior IRS technical advice, which stated that taxpayers should consider phone outreach as the initiation of audit, placing constraints on a taxpayer’s ability to make clear accounting method and other filing changes.
Now the IRS will use initial contact letters to notify the taxpayers that their returns were selected for examination, and will not make initial contact over the phone. If the taxpayer is represented and a valid Form 2848, Power of Attorney and Declaration of Representative, or Form 8821, Tax Information Authorization, is on file with the IRS, the initial letter will be mailed to the taxpayer and a copy of the letter will be mailed to the representative. After mailing of the initial letter and after sufficient time (14 days) for the taxpayer to respond have passed, the IRS will be initiating telephone contacts.