I agree with the previous answer in that you need to contact a tax attorney. Alternatively a CPA experienced in taxation can assist you. In the meantime, read the communications carefully and make certain you take advantage of your appeal rights.
Not all mortgage interest in deductible. When you refinanced, how you spent any excess funds may impact on the matter. You should get a consultation with someone to determine . Our firm could assist you as we know these rules inside and out. But, of course, I am sure there are many firms in CA who can assist you. Good luck.
Marty Davidoff, firstname.lastname@example.org, 732-274-1600. This answer is provided for general information only. You should seek advice from an attorney or tax professional.
This is a favorite issue of the IRS. They typically do this by a mail audit. Since most people do not fight it, the IRS makes a lot on this. You need to appeal within the IRS. Please, IMMEDIATELY contact a Tax Attorney to make this appeal for you. Do not delay.
If you do not like this answer or disagree, please look at one of the other answers provided. It is not necessary for you to try prove this answer is "wrong" or something with which you do not agree. This is a free service for you based on limited facts. Nevertheless, many times you need to consult an attorney with the details to get actual advice specific to your concerns. Do not put too many details in your questions or comments because this makes the information public and could hurt you. Government Regulations contained in IRS Circular 230 regulate written communications about Federal tax matters, including e-mail, between us and our clients. This is another attempt by the government to limit your rights and to extend the control of government over individuals and businesses. Nevertheless, such communications are either opinions or other written communications. This is not an opinion. It is other written communication and was not written to be relied upon, by itself, to avoid any tax penalties. In order to receive assurances of protection from tax penalties from a written communication, you should get an opinion letter. If you would like to discuss an opinion letter relating to any matter, please contact me and I will explain what is involved and what it will cost.