They could show up and the IRS could say, “We’re questioning
your charitable deductions.” If you show up and say, “Look,
I throw myself at your mercy,” they’ll say, “Fine.”
The burden is on the taxpayer to substantiate the numbers on the tax returns.
If the taxpayer is not doing that, the IRS will disallow all charitable
deductions. That’s it. That’s the end of the game right there.
If you simply show up and you’re unprepared, but you’re there
to say, “Look, I just need some more time, I want to hire an attorney,
or give me another week to get the stuff together,” they’ll
cooperate, but if you really want to do that, you should call them first;
that’s the way to do that.
However, if you’re just being uncooperative eventually the IRS will
just say, “Okay, fine. We’re going to assume everything in
the IRS’s favor and against the taxpayer.
What Happens If You are Not Cooperative, Don’t Show Up, Ignore the
Letter or Refuse to Provide the Documents?
There are various ways the IRS can go on that. If you haven’t filed
a tax return, the IRS can file a tax return on your behalf based on whatever
information they have. For example, they might have received a W-2 or
1099s from you on your behalf from third parties, or they might have some
Who knows what else they might have because the IRS gets all sources of
information. They’ll prepare the return based on that and they’ll
notify you that they’re auditing you, and if you don’t respond,
they might just finalize the audit based on the return they filed on your
behalf. That’s one way they could go.
It’s almost always to the taxpayer’s advantage to respond if
the IRS has filed a return on their behalf, because when the IRS does
that, the assumptions they make are all in the IRS’s favor, such
as giving you the standard deduction instead of itemized deductions, or
the lowest number of exemptions and so on. If you receive a notice that
the IRS is filed a return on your behalf, you really should have a return
prepared and filed, because it’s almost always to your advantage to do so.
Anyway, getting back to the
IRS audit, let’s say someone has filed a return and has been audited, there
are a number of ways the IRS could go, depending on the particular facts
of the situation.
The IRS may have some information indicating the taxpayer had income that
wasn’t reported on the return. If the taxpayer does not respond,
then the IRS could just essentially add that number to the income that
was reported on the return, send that out to the taxpayer and say, “Look,
this is what we’re proposing. You’ve got some time to respond
if you don’t think this is correct.”
If the taxpayer doesn’t respond, then the IRS finalizes the audit
and starts to process to get the additional tax assessed. It turns out
there are plenty of places along the way where the taxpayer will be given
the opportunity to correct it if the IRS has made a mistake, but often
what happens is the taxpayers just continue this pattern of denial and
they ignore all of these letters, many of them certified, until they get
to the point where, “Oh, you don’t have any more opportunities
to object,” or it becomes much more difficult and expensive to object.
If you hired someone to handle things initially, it would have been very
straightforward, but now you will have to bring in someone who will have
to spend a lot more time on it and it will cost you more. Like with so
many other things, if you deal with it early on, it will be less expensive.
Typically, with an audit that could be the case. Another thing the IRS
could do in an audit is, if you fail to respond they could start issuing
summonses, to your bank or even to you. A summons is like a subpoena,
in that you’re ordered to go into court and show up.
With an IRS summons, you’re required to show up at the IRS office.
The logical question is, what happens if you ignore a summons? If the
IRS figures it’s worth the resources, they’ll have an IRS
attorney go to a district court judge and say, “Look, this guy ignored
the summons. We want you to issue a subpoena,” and the judge will
issue a subpoena. Of course, you will be notified, so you have the right
to go to court and object, but the judge will issue the subpoena, and
you will have to explain to the judge why you ignored the IRS summons.
If you ignore the judge’s subpoena, you’ll be in contempt of
court, and you’ll face possible jail time or a fine. That’s
one of the weapons the IRS has to enforce their requests and get you to
comply. As far as the summons is concerned, you can’t just simply
show up; you have to answer their questions, or bring the documents requested
by the summons, such as bank statements, brokerage statements or charitable
For more information on
Being Unprepared for an Audit and other
tax law issues, please call
(510) 444-4430 today to
schedule a free initial consultation. Get the information and legal answers you’re seeking.