Receiving an audit notice can be an unnerving feeling. Odds of receiving one are about one in one hundred, but if you do get lucky enough to get one, we can offer some tips.
- Seek a Professional – Some taxpayers may feel this is an unnecessary expense, but having a person that is educated in tax and has an unbiased opinion can be an extreme benefit on your end. For an in person audit, you are able to request the auditor go to your representatives office which allows the IRS agent to talk directly with them instead of asking you questions that you might not be able to answer.
- Don’t Ignore Their Notices! – An IRS letter usually has a certain time limit for you to respond, if you wait too long, they might go forward and correct your tax based on what figures they believe to be accurate.
- Understand what will happen – Most audits do not involve an IRS agent coming to your home or place of business and raiding your files. On the contrary, they are usually done via mail. The IRS notice will specify which area of your return they will be looking into and let you know how they would like to communicate about the items in question.
- Gather Your Proof – Once you’ve found out what portion of your tax return will be under scrutiny, be sure to collect all documents that will verify the figures you reported on your tax return are true and accurate. Any deduction that you are not able to verify with supporting documents will be disallowed on your return.
- Be Nice – Although you may not want to spend your time dealing with an audit, being difficult or rude to the agents will not help get anything done faster. If in preparing for your audit, you find any errors or mistakes you made, don’t try to cover them up. Tell the IRS what was done wrong and feel free to tell them why it may have happened (if you know) and allow them to do the necessary corrections.
- Pay On Time – If the results of the audit does not turn out in your favor (you owe more taxes), be sure to pay when you receive the new bill. They usually give you 30 days to pay unless you set up a payment agreement. Keep in mind if your federal return gets revised, you will most likely have to amend your state return too.