What constitutes a tax audit?

Last week, I received a notice of deficiency because the IRS claimed that I withdrew $9000 from my 401K that I did not report. It was returned within the 60 day grace period, so they were incorrect. So, does that letter from the IRS constitute an audit, or are they only counting face-to-face meetings as audits? ====Audits can be conducted solely by mail.

Are you certain you received a "notice of deficiency" (which tells you to file with the Tax Court) as opposed to a CP2000 notice?

Simply do a 1040X (Amended Return) for the year to show the distribution was rolled over within the 60 days. Keep the documents to show it in case your are called.

then contact IRS and explain what you yo did. Should be OK.

bw

This works as long as that was the only rollover from the 401K that used the 60 day grace period. You are only allowed one per every 12 months. So... if he had rolled over some money (not a direct transfer) from his

401K to an IRA and then took another distribution, changed his mind, put it back within 60 days and before 12 months had elapsed, that makes two 60 day rollovers. The 2nd rollover becomes a taxable distribution.

A 1040X is not necessary as I feel my original return was correct, as filed. My 1040 showed $17000 in IRA withdrawals, but only $8000 was taxable as the $9000 withdrawal was returned when I realized the tax implications. The IRS letter attempted to tax me for the entire $17k.

However, this is not the point of my question. My question is: Did that letter from the IRS constitute an audit? Was I one of the 0.84% of taxpayers that was "audited"?

========================================= MODERATOR'S COMMENT: Tell us what the letter number or notice was on the IRS letter. For example if it was a CP-2000 it was not an audit, and answering it with a letter of explanation should be OK.