Start by restating the question
Write one sentence describing exactly what the agency questions: for example, income reported by a payer that does not appear on the return, or a deduction category it wants proof for. Everything in your package should answer that sentence and nothing else. Extra material only creates new questions.
Note the tax year and the line or form in dispute. Use the same terms as the notice.
Pull the relevant ledger detail
Run a transaction report for the account and period involved. Filter to the specific items. If the notice concerns reported income, look up the payer's deposits, invoices and dates. If it concerns an expense, list the transactions that make up the total. Add a column with the supporting document name.
Export to PDF and spreadsheet. Check that totals match the return. If they do not, find out why before sending.
Attach support in order
Match each transaction to its invoice, receipt, contract or statement. Number the pages and make an index that refers to those numbers. Use black and white copies that are legible. Redact account numbers and Social Security numbers that are not needed, unless the agency requires them.
If a document is missing, include a brief explanation and the closest substitute, such as a bank statement and an email.
Explain differences clearly
If the agency is right in part, say so and show the corrected figure. If a timing difference explains the mismatch, such as income paid in one year but earned in another, show the dates. Short, factual explanations beat long arguments.
Your representative may recommend a different approach for amounts that you owe. Bring the package to them before sending.
Send, track and follow up
Send by a method that gives proof of delivery, and keep the receipt with the package. Calendar a follow-up date a few weeks later in case you have not received a reply, and keep the folder open until the agency closes the matter in writing.
After it is over, correct the books if needed and add a note explaining what changed. Save the package with your tax records for the retention period your advisor recommends.
Example of an index page
An index might list five rows: the notice and its date, the ledger report for the account, invoices numbered one through twelve, the bank statement pages showing the deposits, and a one-page explanation of the timing difference. The reader sees the structure immediately and can find any item in seconds.
Keep a duplicate of everything you send, in the same order, so that when the agency calls you can turn to the same page.
Common questions
Should I send the whole general ledger?
Generally no. Send what answers the question. Large dumps slow things down.
Is a scan acceptable?
Agencies commonly accept clear copies, but follow the instructions on the notice.
This guide is general information, not tax, legal or accounting advice. Rules, fees and due dates change; check with the IRS, the NJ Division of Taxation or a licensed professional for your situation.