In March 2024, Chris and Shawna received a one-year office audit notice for their 2022 taxes and were asked to appear for an audit appointment the following month. The letter stated that the IRS requested additional information regarding their Schedule E deductions, which included documentation to support their claims for rent received, depreciation, mortgage interest, and pensions and annuities. The couple was shocked and didn't know where to start. After taking a moment to calm down, Shawna began reviewing their 2022 tax return.
During her review of their 2022 tax return, Shawna found something valuable to help their situation: the couple had purchased Audit Defense for the tax year in question! Without hesitation, the couple called the number on their Audit Defense paperwork. During this initial call, Chris explained that they were Audit Defense members and had received an office audit for their 2022 taxes. The Customer Service Representative informed the couple about the next steps and reassured the couple they were in good hands.
A few hours later, Chris and Shawna’s Case Coordinator contacted them and requested they send some pertinent documentation, such as the notice they received and a copy of the corresponding tax return. Since this audit involved an interview with the IRS examiner, the Case Coordinator sent personal and rental questionnaires for Chris and Shawna to fill out so that their Tax Professional could better understand the couple's unique tax situation.
After the couple had submitted a copy of their notice and tax return for review, their assigned Tax Professional, Peter, contacted them the same day to request additional documents for their Schedule E deductions. He explained that these documents should include canceled checks, cash register tapes, credit card receipts and statements, and account statements. The documents had to identify the payee, amount, and proof of payment or electronic funds transfer. As the audit was only a month away, Peter requested the information to be sent to him within two business days of the message being sent.
After reviewing the list of requested documents, the couple had questions about specific documentation and the audit, so they scheduled a phone call with Peter. While discussing the required documents at length, the couple needed clarification on a few areas. Peter broke down these specific topics and explained them in a way the couple could understand. Before the end of the call, Peter ensured that the couple understood those terms and knew what supporting documentation they needed to gather for this audit. Because the deadline was approaching and the couple needed more time to gather documents, Peter reached out to the IRS and requested more time. The IRS examiner gave an extension until the end of the month.
This extension gave the couple enough time to gather all the information from their property manager and their four different properties in preparation for the audit. Once Chris and Shawna received this information, they uploaded the documents before the deadline.
After receiving the documents, Peter reviewed and prepared the response. Peter then submitted the information to the IRS examiner and represented the couple during the examination. During the phone interview, the IRS examiner raised concerns regarding under-reported income, wanting to see all the couple's bank accounts, and needing evidence for a few other claims made on the couple's tax returns.After this review, Peter sent the couple a message regarding the additional information the IRS examiner requested. Peter told the couple they should receive an updated audit notice reflecting the amount. However, he assured the couple to be reassured about the amount owed, which would change once they submitted the requested documents.
Just a few days later, Chris and Shawna were able to submit the requested documents. Soon after, Peter sent the new documents to the IRS examiner and scheduled another interview to review the required documents. In the second review, the IRS examiner determined that the couple needed to provide documentation to report more rent than what was stated on the corrected 1099-MISC. Furthermore, the examiner requested that the overseas rental income from the two properties be converted to USD.
After these additional documents were submitted, Peter uploaded them and met with the IRS examiner for the final time. After this last meeting, Peter had great news for the couple! After all the documents were submitted, the couple went from owing $10,000 to $0!
Our Tax Professional, Peter, made this outcome possible! He used his expertise, persistence, and knowledge to resolve this case and get the best possible outcome for the couple!
*Some names and identifying details have been changed to protect the privacy of the individuals.
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