IRS Audit & Refund Notice Assistance for Real Estate Agents in New York City

It comes down to how an agent’s return is built. The IRS scores returns for examination, and a real estate agent’s Schedule C carries several features that lift the score. The income is self-reported with no employer withholding to back it up, the vehicle deduction is often large because an agent really does drive the city showing properties, the home office deduction appears on most agent returns, and the commission income arrives on 1099 forms the IRS matches against what the brokerages reported. None of those are wrong, they are simply the normal shape of an agent’s tax return, but together they make it more likely to be looked at than a salaried W-2 return where everything is pre-validated by withholding. The answer is never to shrink your legitimate deductions out of fear, because that just means overpaying tax to avoid a letter that is manageable anyway. The answer is documentation. An agent who logs the mileage as it happens, measures the home office, and keeps the commission records has nothing to fear from an examination, because every number on the return can be supported on demand. We help build that documentation and handle the response if a notice comes.

First, do not panic, a mileage inquiry is one of the most common and most answerable notices an agent receives. The IRS wants to see that the deduction is real, which means a log showing the date, the business purpose, and the miles for each trip rather than a single round number written in at year end. At the 2026 rate of 72.5 cents per mile the deduction is large for an active agent, an agent claiming 12,000 business miles is deducting $8,700, so the agency reasonably wants substantiation. If you kept a contemporaneous log, whether on paper or through a mileage app, the response is straightforward, we assemble the log and the supporting records and answer exactly what was asked. If your records are thin, we work with what exists, your calendar of showings, your closing records, your appointment history, to reconstruct a defensible business mileage figure. The key is to respond precisely and only to what the notice raises, not to volunteer extra information that opens new questions. We handle the correspondence so you are not negotiating mileage rules with an examiner yourself.

That notice is the city Department of Finance telling you it believes you owe the unincorporated business tax and have not paid it. The unincorporated business tax applies at roughly 4 percent to the net income of sole proprietors and partnerships operating in New York City, and a real estate agent on a Schedule C is squarely within it. The trouble is that many agents never knew the tax existed, so they never filed, and when the city matches a Schedule C against its records and finds no unincorporated business tax filing, it issues an assessment. Those assessments can reach back several years and stack penalty and interest on top, so an agent with $180,000 of net income who never filed could face a multiyear bill well into five figures. The notice is serious but it is workable. We reconstruct the correct liability year by year, apply the exemption thresholds and any credits that reduce it, and respond to the city with a proper accounting rather than accepting the assessment as issued. We also advise on whether an S corporation election would exempt your future income from the tax, so the same notice does not recur.

That is a matching notice, and it is usually simpler than it looks. The IRS receives a copy of every 1099 your brokerages issue, and it compares the total against the income you reported on your return. When the two do not line up, an automated notice goes out. The most common cause is innocent, a 1099 you never received or misplaced, so the income was left off your return without any intent to underreport. Sometimes it is the reverse, the brokerage reported an amount that includes fees or splits that were not actually yours to keep, which makes the 1099 itself overstated. Either way the fix is to reconcile your records against what was reported and respond with the correct figure and an explanation. If a 1099 was genuinely missed, we amend to include it and calculate the small additional tax. If the 1099 was wrong, we document why and push back. The important thing is to answer the notice rather than ignore it, because an unanswered matching notice turns into an assessment for the full amount the IRS thinks you owe, often more than the real number. We handle the reconciliation and the response.

Yes, that is the heart of what audit and notice assistance provides. You do not have to speak with the IRS or the New York City Department of Finance yourself, and in most cases you should not, because an examiner’s questions are easy to answer badly when you are anxious and unprepared. With proper authorization we communicate with the agency on your behalf, receive the correspondence, and respond to exactly what was asked. That matters for a real estate agent, because the issues that come up, the mileage at 72.5 cents per mile, the home office, the 1099 matching, the unincorporated business tax, each have a correct technical answer that is much stronger coming from someone who handles them regularly than from an agent improvising under pressure. We also control the scope, answering the specific question raised without volunteering information that invites new ones, which keeps a narrow notice from widening into a broader examination. The goal is to resolve the matter quietly and correctly while you keep working, so a letter that felt like a crisis becomes a piece of correspondence we close out on your behalf.