Each year, the IRS sends notifications to taxpayers requesting that they furnish additional information to support the items listed on their return. Normally, the notice references a specific credit or deduction listed on the taxpayer’s income tax return. Thankfully, the process for resolving IRS requests for information is outlined clearly in the notice.
The IRS sends a request for information in order to verify information listed on a taxpayer’s return. The request could be a part of an ongoing audit, or a more general inquiry. General requests for information are made shortly after the return is submitted and are a part of a general review which is usually connected to a questionable credit or deduction listed on the taxpayer’s return. In such cases, the taxpayer will receive a notice stating that their return is under review.
How it Works
Once a taxpayer receives the request for information, he or she should forward the requested information to the IRS. If this is not done within 30 days, the IRS will disallow the credit or deduction for which they are requesting information.
Often, the IRS’s request for information is the result of an audit. In this instance, the IRS will list the tax changes which would result if the deduction or credit in question is disallowed. You have the choice of agreeing or disagreeing with the IRS findings, and if you disagree, providing information which substantiates your credit or deduction. For example, the IRS often requests school records from taxpayers who are claiming Earned Income Credit (EIC) on their return to verify that their dependent is eligible to receive the credit.
This does not mean that the taxpayer is guilty of any wrongdoing, just that the IRS has selected their return for further review. Often, credits selected for additional review are those credits which have a history of taxpayer abuse and thus, are subject to additional scrutiny from the IRS.
The IRS does not have a general time frame in place for resolving request for information inquiries. There may, however, be a time frame outlined in the notice you receive which is specific to your tax situation.
Failure to respond to the IRS’s request for information could result in you being assessed additional tax, penalties and interest. It is in your best interest to respond the IRS notice within the 30 day time frame outlined in the notice. The IRS will only accept the exact information requested in the notice, no substitutions are allowed.