Surviving An IRS Audit

Finding out that you are going to be audited by the IRS can be a little bit scary. However, with the right preparation, anyone can get through it. Here’s what you need to know to survive your IRS audit.

Don’t Ignore The Notice

Once you receive your IRS audit notice, you will usually have 30 days to respond to it; the precise time period will be specified in the notice. You should never ignore any correspondence from the IRS, claiming to not have received the letter won’t hold water in a courtroom. You can’t simply feign ignorance on the basis of not having received the letter.

Read The Notice & Gather Documents

Carefully read the notice from the IRS as it will indicate the reason for the audit and which tax years are under scrutiny.

Gather all relevant documents, such as tax returns, receipts, bank statements, and other supporting records for the specified years. Organize the documents in a logical and easy-to-follow manner.

Prepare Your Response

Review your tax returns for the audit years and compare them with the supporting documents. Identify any potential discrepancies or areas of concern. If you believe there are errors on your returns, consult your tax professional to determine the best action. Prepare clear and concise explanations for any discrepancies or unusual items that may arise during the Audit.

Cooperate With The IRS

Respond promptly and professionally to all IRS requests and communications. If the Audit requires an in-person meeting, be well-prepared and organized. Maintain a courteous and cooperative attitude throughout the process. Remember that cooperation can help expedite the Audit and may result in a more favorable outcome.

Understand Your Rights

Educate yourself about your rights as a taxpayer during an audit. These include the right to representation, the right to appeal an IRS decision, and privacy and confidentiality. Understanding your rights will help you navigate the audit process more confidently.

Provide Only Requested Information

During an audit, the IRS may request additional documentation beyond what is initially provided. While it's crucial to cooperate, it's equally important to provide only the information requested and not volunteer additional information irrelevant to the Audit. This helps prevent unnecessary complications or potential issues.

Keep Copies of All Documents

Make copies of all documents you submit to the IRS. This includes correspondence, receipts, and any other records. Maintaining a well-organized file with copies of all audit-related documents will be helpful in case there are future inquiries or appeals.

Consider Hiring A Tax Professional

You have the right to have a tax professional represent you during the audit.  If you hire a tax professional, you may never need to meet with the auditors.  If choose to handle the audit yourself or to have a representative go with you, you increase the risk that the agent/auditor will ask questions that you would prefer not to have to answer on the spot.

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