An Automated Underreporter (AUR) notice is a common IRS communication triggered when the income or payment information reported on your federal tax return does not match data the IRS receives from employers, banks, or other entities. The IRS’s automated system flags these discrepancies to ensure accurate tax reporting and payment compliance.
Why Does the IRS Send AUR Notices?
Each year, the IRS collects financial data from third parties through forms like W-2s, 1099s, and bank interest statements. These are matched automatically against the income and deductions reported on your tax return. If the IRS identifies unreported or underreported income—for example, missing freelance payments or overlooked investment earnings—it sends an AUR notice to inform you of the discrepancy.
How the Automated Underreporter Process Works
- Data Matching: The IRS electronically compares your tax return information with data from employers, financial institutions, and other sources.
- Discrepancy Detection: If the reported amounts don’t align, the system flags your return.
- Notice Issuance: You receive an AUR notice detailing the mismatch, tax year, and the proposed change.
- Your Response: You are given a deadline, typically 30 days, to agree with the IRS’s proposed changes or to dispute them with supporting documentation.
- IRS Review: After receiving your reply, the IRS reviews your evidence to confirm or adjust your tax account.
Identifying an AUR Notice
An AUR notice clearly states:
- The tax year involved.
- The income or deduction discrepancy.
- The IRS’s proposed adjustment.
- Instructions for responding and where to send your reply.
- A response deadline to avoid penalties.
Common Scenarios Triggering an AUR Notice
- Forgetting to report freelance income your client already reported on a 1099.
- Differences in reported bank interest.
- Claiming deductions or credits without matching third-party documentation.
- Multiple income sources or job changes causing reporting mismatches.
Who Is Most Likely to Receive an AUR Notice?
- Freelancers and self-employed taxpayers.
- Investors with dividend, interest, or capital gains income.
- Taxpayers with multiple employers or 1099 income sources.
- Those claiming deductions or credits inconsistent with IRS data.
How to Respond to an AUR Notice
1. Read the Notice Thoroughly: Understand what amounts are questioned and why.
2. Collect Documentation: Gather W-2s, 1099s, bank statements, receipts, or other relevant records.
3. Decide Your Position:
- Agree with the IRS: Sign the notice and pay the additional tax promptly.
- Disagree: Provide clear, documented evidence showing why the IRS’s data or proposed adjustment is incorrect.
4. Reply on Time: Send your response by the deadline provided to avoid penalties or enforcement actions.
5. Seek Help If Needed: For complex cases, consulting a tax professional can be invaluable.
Important Tips
- Maintain accurate records year-round to minimize discrepancies.
- Use reliable tax preparation software or professional services to double-check returns.
- Never ignore an AUR notice; prompt response prevents escalation.
- If payment is challenging, consider IRS payment plans or installment agreements.
Common Mistakes to Avoid
- Ignoring the notice thinking it’s a scam or trivial.
- Assuming the IRS’s data is always correct; they can make mistakes.
- Delaying your response past the deadline.
- Failing to keep or provide documentation to support your claims.
FAQs
Is an AUR notice a bill?
No. It is a proposed change. You must respond to accept or dispute it.
Can I call the IRS with questions?
Yes, the notice includes a contact number for inquiries.
What if I still disagree after responding?
You can appeal or request a conference with an IRS officer.
Does an AUR notice affect my credit score?
No, IRS notices do not impact your credit score.
Related Resources
Learn more about handling IRS notices in our guide on How to Respond to an IRS Notice. For insight about IRS income mismatches, see IRS Notice CP2000: Underreported Income.
Trusted Sources
- IRS: Automated Underreporter System https://www.irs.gov/businesses/small-businesses-self-employed/automated-underreporter-system
- IRS: What to Do If You Receive a Letter or Notice https://www.irs.gov/letters/what-to-do-if-you-receive-a-letter-or-notice-from-the-irs
Responding quickly and accurately to an Automated Underreporter notice helps you resolve discrepancies efficiently, avoid penalties, and maintain compliance with IRS tax rules.