The IRS receives information from third parties, such as employers and financial institutions. Using an automated system, the Automated Underreporter (AUR) function compares the information reported by third parties with the information that appears in your statement to identify possible discrepancies. If they discover that you didn't declare your income, the IRS begins the collection process. First, they send you a letter to let you know that they have found a discrepancy and that you may have unpaid taxes.
At this point, you can dispute the discrepancy or make the necessary arrangements to pay the amount due.
