Mel Recently Received a 30-Day Letter from the IRS

question 98

Essay

Mel recently received a 30-day letter from the IRS. Although his tax return being audited has several potential large issues (potential tax consequences of $70,000 − $80,000), the IRS agent auditing his return only identified one item that will require a modest adjustment of $10,000. Mel feels strongly that the $10,000 adjustment would not hold up in court and was surprised that the IRS agent did not identify some of the other potential larger issues. What are Mel's choices with respect to the 30-day letter and what factors should influence his decisions?

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Definitions:

Local Food Bank

A non-profit organization or charity that collects and distributes food to those in need within a local community to combat hunger and food insecurity.

New Employment

The phase of starting to work in a new job position or with a new employer.

Market Basket Measure

A benchmark of income poverty that estimates the cost of a specific set of goods and services representing a modest, basic standard of living.

Low-Income Cut-Off

A statistical threshold under which a family unit would be considered to be living in relative poverty, defined by their income.