The IRS knows what returns you’ve filed, what returns you haven’t filed, what you owe, when your last audit was, and how it turned out. They even keep track of where you live now and where you lived in the past.
All that being said, there is still a great deal that the IRS doesn’t know about you. One of the reasons taxpayers are so terrified of the IRS is that, there is a universal perception that the IRS has more information than they really do. Wouldn’t you like to know what the IRS really does know about you?
You have two main tools available to you to obtain copies of IRS information; transcripts, and the Freedom of Information Act (FOIA).
Transcripts come in three types:
- Account transcripts
- Wage and income transcripts
- Return transcripts
An account transcript contains information about your accounts with IRS by tax year. It includes amounts you owe from tax returns or audits, additions such as penalties and interest, payments you have made, and your balance due.
A wage and Income transcript includes data the IRS has on your various sources of income such as wages, interest, stock sales, etc. It consists of your W-2s, 1099s, 1098s, and other forms filed with the IRS by third parties.
A return transcript is not a photocopy of your filed tax returns, but it does show the dollar amounts you reported line by line so you can figure out what your tax return looked like in case you have lost it.
The second tool; the Freedom of Information Act (FOIA) request entitles you the taxpayer to certain IRS documents such as legal files, auditor work papers, and other forms of information the IRS has on file. FOIA requests are not usually necessary, but if you are in hot water with the IRS, a FOIA request might get you information about how the IRS made their determinations. This can be vital in determining the best course of action and your defense strategy. For information on how to make a FOIA request, you should follow this link to the IRS website: http://www.irs.gov/pub/irs-utl/irs_foia_guide.pdf.
To learn more about successfully negotiating with the IRS, please read the upcoming five articles in this Ezine Article Set: How low can you go? Know your reasonable collection potential, Honey vs. Vinegar: Align your goals & Earn some leeway, When to call the IRS,When not to call the IRS, and You’re in over your head; know when to bring in a tax pro.