In January of 2022, TaxAudit members, Mindy and Aziz, received a letter from the IRS for the 2019 tax year.
Mindy and Aziz had previously received an IRS audit that was handled by TaxAudit’s Audit Defense team – so they knew to immediately reach out to customer service to get the ball rolling. Once their case was started by the customer service representative, they were assigned to their case coordinator, Cerissa Braggs, who requested a copy of the notice they received as well as a copy of the corresponding tax return. Mindy immediately gathered and submitted the documents.
Upon receipt of this documentation, Cerissa determined that the letter they had received from the IRS was a field audit. These types of audits typically require in-person meetings with the IRS, so the case was assigned to our outside tax professional department. Mindy and Aziz were then sent a set of questionnaires to complete, which would give their tax professional a better understanding of their situation. Shortly after the submission of these questionnaires, their case was assigned to their tax professional, Gerard.
Gerard reviewed the notice and tax return and then called Mindy and Aziz to discuss the case with them. He explained that the IRS was looking into their virtual currency transactions. After an initial call with the IRS auditor, Gerard was told that the case was going to be expanded to include the 2020 tax year. Gerard requested the tax return for the 2020 tax year from Mindy and Aziz and let them know the additional supporting documents that would be needed. Once all the documents were gathered, Gerard submitted the documents to the IRS for the 2019 and 2020 tax years.
Then, the waiting game began. Gerard would routinely follow up with the IRS every few weeks to check on the status of the case and to ensure that the IRS had everything they needed. Unfortunately, the Crypto Unit within the IRS was taking an excessive amount of time to review, and Gerard consistently was following up with the group manager to put pressure on the unit to respond. Weeks turned into months, and Gerard, Mindy, and Aziz were still waiting to hear from the Crypto Unit regarding the documents submitted. More than a year passed, and additional letters continued to come in from the IRS, including a letter expanding the audit to also include the 2021 tax year.. While this process continued, Gerard was steadfast in following up with the IRS, putting pressure where needed, and keeping Mindy and Aziz updated every step of the way.
A year and a half after their case had been started, a summary from the Crypto Unit was finally received, and the IRS advised they were looking into over $225,000 of unexplained deposits that were deemed income. Gerard requested a copy of all the documents that the IRS had received from third parties so that he could review them for accuracy. Over the course of several hours, Gerard, Mindy, and Aziz combed through over 1400 pages of documents to differentiate capital gains transactions from unaccounted deposits. Gerard then reached out to the IRS to gain further clarification and provide necessary information. During this call with the IRS, Gerard also advocated for Mindy and Aziz, insisting that they had the right to a speedy audit, and it had been two years since the initial notice.
Shortly after this phone call, Mindy and Aziz received their final letter from the IRS. For the tax year 2019 and 2020, there was no balance owed, and for the 2021 tax year, they were owed a refund of $500 from the IRS! In total, Mindy and Aziz received over 30 letters from the IRS and spent two years with their tax professional on their three-year audit. While virtual currency is not a straightforward subject, Mindy and Aziz’s tax professional, Gerard, advocated, supported, and fought for them every step of the way.
These types of cases are why we are proud of the services we provide at TaxAudit – and why we have proudly been defending taxpayers for over 35 years. If you are interested in purchasing audit defense and having the peace of mind that comes with it, click here for more information!
*Some names and identifying details have been changed to protect the privacy of the individuals.
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