Problems with IRS Audits

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IRS audits can be worrisome.  If you have received a notice that you are being audited, do not panic.  You may think that your IRS Problems are going to escalate because of the audit, but if you handle the situation right, everything will be fine.

First of all, read the notice and make sure you understand what the IRS wants from you.  You will find the information regarding the year they are auditing, what kind of audit they are performing, and the documentation necessary.  You will be given a deadline for a response, usually 30 days.  Do not set the notice aside and forget about it.  Respond immediately and start getting organized.

The IRS conducts audits in a number of ways.  The two most common types of audits are correspondence and face-to-face.

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Correspondence Audit

The IRS uses the mail to conduct a correspondence audit.  More often than not, these audits are used to make corrections on your tax return.  It is important that you respond as soon as possible.  If the correction means that you owe taxes, any delay will add penalties and interest to what you owe.  Read the notice carefully, gather and copy any necessary documentation, and respond by the deadline indicated.  Keep copies of all your correspondence with the IRS.  Be aware that if you disagree with the stated corrections, you do have a right to appeal.  Put all of this information in writing along with the necessary documentation and mail it with your response.

Face-to-Face Audit

A face-to-face audit requires a meeting between you and a revenue agent or tax auditor.  The notice you receive will give you a place and time for the audit or you will be requested to call to set up a meeting.  Steps to follow when preparing for and attending a face-to-face audit include:

•    Do not set the notice aside.  You usually need to respond within 30 days.
•    Read and re-read the notice.  Understand what is expected of you and what documentation you will be required to provide.
•    Get organized.  Gather your documents and be prepared to prove the information on your tax return is correct.  If there are any missing records, request copies from the IRS now.  If you are organized and ready for the auditor’s questions, the audit will run smoothly and the auditor’s job will be easier.  This should work in your favor.
•    Bring only the requested documentation.  Do not bring any documents that were not requested.  If you are asked about an item and the documentation is at home, it will probably be dropped.
•    Check your attitude.  Do not come to the audit ready for a fight.  Be polite and courteous.
•    Provide copies of the documentation.  Do not give the IRS your originals.
•    Answer questions with “yes” and “no”.  Small talk can actually provide the auditor with valuable information.  Do not give them a reason to expand the audit.
•    Understand your rights.  Get informed about the audit process, be aware that you can disagree with the IRS’s findings, and know that you have the right to request an appeal.  It is also important to note that you have the right to take a tax professional with you to the audit.

If your IRS Problem is concerning an audit and you require more information and direction, our knowledgeable staff will be able to assist you.  Get organized and get out from under your IRS Problems with our help.  Contact us today.

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