Over the past few months, many Wisconsin taxpayers have received unexpected “Office Audit” notices from the Wisconsin Department of Revenue (WDOR) for tax years 2021–2023. These notices often claim additional tax due on retirement distributions, even for taxpayers who properly made Qualified Charitable Distributions (QCDs) from their IRAs.
Here’s the good news: Most of these notices are erroneous and can be cleared up with proper documentation.
The Wisconsin Institute of CPAs (WICPA) has been in direct contact with the WDOR to address this issue.
According to the WICPA, the WDOR has agreed to:
- Accept one appeal and set of documentation to clear multiple years of notices
- Assign a dedicated team to review and resolve QCD-related cases promptly
- Cease further QCD audit notices beyond this limited project
- Allow refunds for taxpayers who may have already paid in error
The WDOR has recently started to send out an additional notice to taxpayers stating the due date of the QCD appeal and encouraging those appeals to be filed. It also foreshadows that unappealed assessments may trigger the WDOR to add back QCDs and assess more taxes, penalties, and interest in subsequent years. Just another reason to provide WDOR with the QCD documentation instead of paying to make this go away.
WICPA continues to monitor the situation and update practitioners as new information becomes available. You can read their full statement here: WICPA Expresses Concerns with DOR on QCD Billings
What You Should Do
If you or a family member received a letter titled “Notice of Office Audit Amount Due — Individual Income Tax,” these notices are not necessarily an indication of any error on your part. Often, they are based on incomplete reporting data from the IRS.
If you did receive a QCD-related notice:
- Don’t pay immediately, as these can often be resolved with an appeal
- File an appeal within 60 days. Appeals can be filed online, by fax, or by mail and should include:
- A copy of the EFT record or check showing payment from your IRA to the charity
- The charity’s acknowledgment letter confirming receipt and that no goods or services were provided in exchange
- Your taxpayer ID, letter ID, and tax year clearly noted on your submission
Bottom Line
If you’ve received one of these Wisconsin DOR audit notices, don’t panic—and don’t rush to pay, but do make sure to file your appeal as soon as possible. With the right documentation, most cases are being resolved in the taxpayer’s favor.
If you’d like help reviewing your notice or preparing an appeal, our team at Night Owl CPA can handle the process for you to ensure everything is properly documented and submitted.
Contact us if you’ve received a QCD-related audit notice or have questions about your 2021–2023 filings. We’re here to make sure your charitable giving is recognized as intended.