Common Audit Notices and What They Mean for your Taxes

We've all heard horror stories about IRS tax audits, but is it really as scary as it seems? The fact is that most audits are automated and less intrusive than you realize, with most of them rectified by simply verifying some basic info. While audits shouldn't be ignored, they don't have to rule your life.

Discover some of the most common Internal Revenue Service (IRS) audit codes and what steps to take if you find an automated audit notice in your mailbox.

Why did I receive an automated audit?

There are a whole host of reasons for an automated audit, but the most common is that the information the IRS has on file for you doesn't match what you submitted with your tax return. In many cases, this happens with reported income. In this case, you'd receive an audit notice in the mail, with an outline of what's incorrect and possibly even a new tax due amount.

What does a tax audit mean for you? These audits are most often resolved through the mail as something the IRS calls a "correspondence audit." Audits that may require a more intensive review or an in-person meeting could come as the result of questionable tactics or even a random audit. The IRS could conceivably audit you for any reason. Many audits are generally due to number mismatches, name errors, or other issues that could be data-entry or reporting-related.

Common audit notice numbers

Many won't be covered here, but some of the most reported include:

  • CP2000:These underreporting notices go out when your income claimed doesn't match the documents received by the IRS, such as W2s or 1099-MISC forms.
  • CP503:This is sent out to demand unpaid taxes owed from a previous year.
  • CP23:This notifies the taxpayer that the IRS has adjusted the 1040 to match what the IRS has on record for estimated tax payments or credits received.

Many other notices may be sent out, with several things in common: They usually come with a breakdown of what the IRS has on file so that the taxpayer can review it against their records. These notices also typically have a new tax amount due for the year filed. If the amount is greater than what the taxpayer had on their filing, a new total due will be listed with a request for immediate payment.

When in doubt, ask for help

If you need help, don't hesitate to reach out to a tax professional. It's better to be safe than sorry and it's worth it to get IRS issues taken care of in a timely manner.