In May of 2025, Sarah received a letter from the IRS for her late father. It was one of those official IRS notices that makes your stomach drop before you even read the second sentence.
Reading through the letter, she realized it was regarding something most people never have to learn about: a trust tax return. Most individuals are familiar with and file a Form 1040. A trust, on behalf of the deceased, files Form 1041.
After reviewing the letter in its entirety, Sarah knew that this was outside of her wheelhouse, so she reached out to TaxAudit for help. After speaking to customer service representative, Peggy, Sarah was able to get a case started for her father’s IRS letter. Rebekah, the case coordinator assigned to help guide the process along, assisted Sarah in getting all the necessary documents uploaded – a complete copy of the IRS letter as well as tax returns for her father. Once those documents were received, the case was moved to Michele, the tax professional that would be walking Sarah through the audit process.
Michele explained that the IRS letter, a CP11, is most easily translated to, “we changed your tax return, and now our system says you owe.” The IRS computer had disallowed some withholding that had been claimed on her father’s return, and the account showed a large amount due – a balance of over $10,000! Sarah let Michele know that she had already filed an amended return for her father for the 2023 tax year and had not heard anything back. Michele explained it can take 16 weeks or more to process amended returns, but they would continue to work together on the notice in the interim.
After reviewing the notice, original return, and amended return, Michele found where the true issue was. The income that was reported on Form 1040 should have been reported on Form 1041 and a Schedule K-1 should have been filed for each beneficiary.
Michele let Sarah know that they had a game plan for tackling this issue. The plan was straightforward: respond to the notice on time and ask for breathing room while the IRS processed the paperwork that was still in motion. Sarah agreed that this sounded like the best course of action, so Michele prepared a response to the IRS, letting them know about the amended tax return that was still waiting to be processed. She then forwarded it to the quality control department for review. After the response was reviewed by the quality control department, it was sent off to the IRS.
Around this same time, Sarah informed Michele that she had received a bill from the IRS. After reviewing it, Michele determined it was a collections notice. Michele assured Sarah not to pay the amount owed and that she would reach out to the IRS while the response was in review. After Michele’s call to the IRS, a collections hold was placed while the agency reviewed what had been submitted. While not a finish line, it was a much-needed pause button to allow the case to proceed forward.
While waiting for the IRS, Michele continued to check in on Sarah and advised her to send any additional letters she received from the agency. Sarah had, in fact, received a few letters from the IRS requesting more time. These are commonly called “stall letters” or “we need more time” notices. They basically say, “We’re still working on your documents—please wait.” It’s not closure but it is confirmation that the case is still alive in the system.
Additionally, Michele helped guide Sarah on filing an additional amended return to remove the income that should’ve been on Form 1040 – and then filing Form 1041 with the income, withholdings, and Schedule K-1’s.
Finally, after months of patiently waiting, Sarah received the confirmation that she was hoping for. The IRS accepted the response and the amended returns, and the balance owed was now $0! At the conclusion of her case, Sarah had this to say:
“Michele Allen, EA, was outstanding throughout my tax process! Without her assistance I would have been lost. She helped me navigate my late father's end of life tax issues and assisted me in rectifying my errors. Notably, she was always extremely responsive to my questions, via both the TaxAudit portal and phone calls. I'm extremely grateful to Michele and to TurboTax for providing a venue for tax assistance. I wish I could provide a score higher than 10!”
If you would like to have someone walk with you through the audit process, visit our website at TaxAudit.com!
*Some names and identifying details have been changed to protect the privacy of the individuals.
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