James Jimenez & Associates, LLC

Certified Public Accountants

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Tax News & Tips

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What To Do If You Get An IRS Or State Tax Notice


The IRS plans to conduct more "correspondence audits"
than it has in the past because the Service is finding
that these audits deliver more revenue than office and
face-to-face audits. Correspondence exams can be as
simple as asking about a tax return data discrepancy,
correcting an error on a return, or asking for a missing
form. But the IRS is also using these audits to focus on
other issues, including such things as employee business
expenses, the earned income credit, charitable deductions,
and the tax credit for buying a home.

As states struggle with budget issues, they, too, are
getting more aggressive in collecting taxes. One
particular state issue is "use taxes." Like sales tax,
the use tax is assessed on items you purchase out of
state and use in your home state. If you purchase items
on the Internet from an out-of-state company or buy from
Canada or overseas, you may be contacted about use taxes.

If you get a letter from the IRS or the state, contact us
as soon as possible. Don't ignore the correspondence
because it will not go away. Let us know about the
notice when you receive it. It is much easier for us to
resolve the problem if we're involved from the beginning.
There are Practitioner Hotlines at the IRS we can call
to talk to experienced representatives to settle the
matter as quickly as possible.