IRS Audit Help - Your Guide to Survive
Tax Law

IRS Audit Help – Your Guide to Survive

Introduction

 

 

Dealing with an IRS audit help can be stressful and intimidating. However, with the right preparation and help, you can get through it successfully. This article provides a comprehensive guide on what to expect during an IRS audit and tips for navigating the process smoothly.

What Triggers an IRS Audit?

The IRS audits around 1% of all individual tax returns each year. IRS audit help is something no taxpayer wants to need but many do. Certain red flags in your return increases the chances of being audited, including:

  • Income substantially greater or less than previous years
  • Math errors
  • Unreported income
  • Deductions that seem excessive for your income level
  • Business losses year after year
  • Suspicious Itemized deductions

The IRS also uses advanced analytics to detect tax returns with a high likelihood of errors. So even an innocent mistake can potentially trigger an audit.

Types of IRS Audits

The IRS conducts three main types of audits:

Mail Audits

  • IRS sends a notification in the mail requesting verification for certain information on your tax return
  • Least invasive type of audit
  • Request is typically straightforward documentation

In-Person Audits

  • Require you to schedule an appointment at a local IRS office
  • More detailed than a mail audit
  • Audit agent will ask questions about your financial situation

Field Audits

  • IRS agent will come to your home or place of business to conduct audit
  • Most complex and invasive type of audit
  • Requires extensive documentation and records

What to Expect During an Audit

Notification

You will receive a letter from the IRS informing you that your return has been selected for an audit. The letter will identify the tax year, issues of concern, documentation required, and steps for responding.

Information Request

In a mail audit, the letter itself is the information request. In other audit types, the initial letter will be followed by a formal request for specific supporting documents. Respond to all document requests in a timely manner.

Scheduling the Audit

For in-person and field audits, you will need to schedule an appointment. You can request to reschedule if the original date does not work for you.

The Audit Meeting

The audit itself involves meeting with the auditor and providing the requested documentation. Be prepared to answer questions about issues identified in the audit notification letter. The auditor may also ask broader questions to get clarity on your financial situation.

Potential Audit Outcomes

After reviewing the documentation and responses, the auditor will make their assessment. There are three main possible outcomes:

  • No changes: If no issues are identified, your return is accepted as filed.
  • Adjustment: If errors are identified, you may have to pay additional tax, interest, and penalties.
  • Inconclusive: More information is needed to make a determination. The auditor will follow up with additional document requests.

Audit Closure

Once a determination is made, you will receive written notice from the IRS summarizing the audit findings, adjustments (if any), and appeal options. This closes the audit process. Follow all instructions for making any outstanding payments.

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8 Tips for Surviving an IRS Audit

Navigating an IRS audit does not need to be a nightmare if you prepare properly. Here are 8 tips for smooth sailing:

1. Gather audit documentation now

Don’t wait until you are audited. Organize relevant tax records, receipts, mileage logs, invoices, and bank statements so they are easy to access. Having your paperwork in order shows good faith.

2. Pick an authorized representative

Consider hiring a tax professional to represent you. They know audit procedures and can help present your information clearly.

3. Remain calm and collected

Audits do not presume guilt. Maintain composure, answer questions directly, and provide facts. Do not appear defensive or argumentative.

4. Tell the truth

Lying or concealment are red flags. Be honest and forthcoming – but do not overvolunteer information. Stick to auditor’s specific requests.

5. Follow instructions precisely

Carefully comply with all document requests. Keep copies of any documents you provide. Respond to all calls and letters from the IRS promptly.

6. Limit what you say

Aside from basic Q&A, say little. Assume anything you say can be used against you. Ask representative before volunteering additional info.

7. Know your appeal rights

If you disagree with the audit findings, make sure you understand your appeal options and deadlines.

8. Request manager review

If interactions become hostile or uncomfortable, ask to speak with a higher level manager. Remain calm and rational in this discussion.

When Is Professional Help Needed?

For most straightforward audits, you can handle the process yourself by following the above tips. However, consider consulting a tax professional if:

  • You are facing a complex audit on multiple issues
  • The auditor challenges a key matter where laws are unclear
  • Penalties and interest exceed 20% of the tax due
  • You are at risk of criminal prosecution

The right representative has experience defending audits and can help you avoid unnecessary taxes, penalties, and legal trouble. IRS audit help services range from simple consultation to full representation.

Frequently Asked Questions

Why do audits happen?

The IRS and state tax agencies use audits to verify reporting compliance, uncover unreported income, and collect additional tax revenue. Audits ensure the tax system is fair and consistent for all.

How long can the IRS audit?

For individual returns, the IRS can generally go back 3 years. If they suspect substantial underreporting, they can look up to 6 years back. No limits exist for fraudulent returns.

What if I miss the audit deadline?

Missing an audit deadline can seriously compound your problems. Immediately contact the IRS, explain why you missed the deadline, and request more time. Have your new documentation/response ready to send.

When should I get a tax attorney?

A tax attorney is advisable if criminal prosecution seems likely. Warning signs are if the IRS requests an interview under oath or begins discussions of fraud. Protect yourself by exercising your right to counsel.

Can the IRS take my home?

In most cases, the IRS cannot seize your primary home to cover back taxes. They can place a federal tax lien on your home which attaches at sale. Other assets like wages, bank accounts, and vehicles are easier for the IRS to seize or garnish.

The Bottom Line

Dealing with the IRS can seem intimidating and overwhelming for taxpayers. If you find yourself facing an audit, stay calm and know that getting through it is possible. With careful record keeping, honest responses, and help from a tax pro if needed, you can limit stress and navigate the audit process successfully. Pay any additional tax or penalties on time, and move forward knowing your taxes are straight with the IRS again.

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