Tax Day. A notorious time of stress and confusion. Especially if your return gets rejected or if you receive an examination letter back from the IRS. Dee Dee Gowan, Staff Attorney in the Low-Income Taxpayer Clinic (LITC) at Neighborhood Christian Legal Clinic, says oftentimes this kind of correspondence from the IRS can scare a person, but it does not necessarily mean something bad has happened or will happen. After more than decade of working in Tax Law, Dee Dee is very accustomed to the different nuances of an IRS examination. “An exam does not mean you’re in trouble or you’ve done something wrong. It means the IRS is questioning,” she says. “And for things like the Earned Income Tax Credit or other child-related benefits, it’s actually very common that the IRS will question it.”
The worst thing that a taxpayer can do when they receive this kind of letter is to simply ignore it. Dee Dee says, “Most people will have this problem and then they just stop filing, which is a problem.” Avoiding the issue will not make it go away; it will only make it worse. She urges anyone who gets a letter from the IRS to come through an intake at the Clinic to receive assistance. Those eligible for services through the LITC must be at or below 250% of the Federal Poverty Line. These guidelines, though, are purposely broad. “Almost half of the population would qualify based on their income level to receive our services. So if someone is being examined, please come see us,” says Dee Dee. Even those individuals who do not meet these eligibility requirements can still come through the LITC to receive a free consult and coaching.
When someone faces an issue with the IRS, Dee Dee says, “The first thing we have to do is get them in filing compliance so they can access some of the programs that the IRS has to deal with what you owe.” Ultimately, the cost of not resolving these issues can be very high. “Sometimes we’ve found out when someone owed and then didn’t file for years, it was actually erroneous and by not filing they didn’t get refunds that they could have gotten.”
Other dangers include trying to respond to these examination letters on your own. Often, even if the problem itself is not a very difficult one to remedy, the actual process of responding to the examination can be challenging. Dee Dee says, “The problem is that the IRS exam process is through the mail, so it’s this complex, 12- to 15-page letter that folks don’t understand. And they might try to understand it and it might list several documents they need to submit and they’ll gather those documents, but it’s what’s not inside those documents—yes, they provide a school record, but it’s not the right school record or it’s not a complete school record—yes, they provided a medical record, but something’s missing.”
These kinds of labyrinthine requirements are simple for the LITC to navigate because they have spent so many years responding to similar requests. Dee Dee says, “We’re able to look at those documents, find where those holes are, get a complete set of documents, and get a successful result with the first submission because we know what they’re looking for.”
To learn more about the LITC or to receive assistance with an IRS examination, please visit our website or call our office at 317-429-4131.