When it comes to taxes, there’s nothing worse than the idea of being audited. While some are at higher risk than others, anyone can be targeted for a review by the IRS. The average taxpayer has a 1 in 200 chance of being singled out for an audit.
So what can you do if you receive that dreaded notice? In nearly every case, it’s best to consult with a tax professional. Here are some more tips to help you prepare:
- Don’t ignore an audit notice. If you receive one, you’re usually given 30 days to respond—and if the IRS doesn’t receive a response, they can simply adjust your tax liability and send you a bill.
- Read the notice carefully. An audit notice details the items that the IRS intends to examine. This is information you’ll need when you report to the audit.
- Get organized. It’s generally in your best interests to make the auditor’s job easier by having your records in order. Group the items listed on the audit notice for fast access, and arrange things logically by date.
- Obtain copies of any missing records. Keep in mind that it’s your responsibility to prove your deductions, not the auditor’s. If you have taken deductions that you can’t prove, your returns will be adjusted accordingly.
- Bring only the records that are being examined. An auditor may decide to ask about items that weren’t originally covered in the audit notice. If you don’t have that material with you, in most cases the auditor won’t press the issue further.
- Don’t be difficult. Contrary to popular belief, IRS auditors are actually people. If you treat the auditor politely and resist the urge to unload your frustrations, the audit process will be far smoother. Auditors are generally willing to cooperate and provide guidance—if they’re treated courteously during the process.
- Provide copies, not originals. The IRS is not responsible for lost or misplaced documents, and if you give your original documents to the auditor, you’ll no longer have records of your deductions.
- Stay focused on the audit. IRS agents are professionals, and may draw out questionable statements in what seems like friendly conversation—especially regarding your assets or recent financial activities. It’s best to answer all questions in a straightforward manner, if possible with a simple “yes” or “no.”
- Don’t be afraid to say no (politely). If an auditor asks about items or records that you firmly believe have no foundation for examination, feel free to turn down the request, especially if the item wasn’t covered on the original audit notice.
- Know your rights. Familiarize yourself with the tax laws that apply to you, as well as the actual audit process. This also helps you to appear knowledgeable, earning you respect from the auditor.
Again, it’s best to enlist the services of a tax professional if you’re being audited—but you should still be prepared ahead of time. Knowing what to expect from a tax audit increases the chances that you’ll emerge from the process relatively unscathed.
If you are being audited or have questions regarding an audit, call 888-411-5389 (LEVY) or fill out the form to the right an someone from our A+ BBB Rated staff will contact you shortly.
