Preparing for an IRS Audit
Be Prepared Just In Case You Get Audited
Getting audited by the IRS is a hassle no one needs. So when you get the letter in the mail that an IRS agent is analyzing your tax returns, knowing what to expect to make the process run smoothly can lessen the pain.
The IRS selects audited taxpayers multiple ways. It can be completely random, due to mismatching documents, or the audited return was connected to another audited taxpayer, like a business partner.
An audit begins by getting an audit notice from the IRS in the mail. Notice can also come via telephone, but the IRS will usually send a confirmation letter.
After receiving the letter, the IRS agent should be contacted to schedule a meeting. You can also conduct the audit by mail. But be prepared.
You should know the details of your tax return like the back of your hand. Then, gather records and forms to support whatever the IRS is challenging. The IRS will indicate which records are needed.
After the IRS completes its audit, you’ll get a report outlining what the agent recommends and the amount you owe.
The IRS agent can then ask you to sign a form waiving your appeal rights. You can sign the waiver and pay the tax, or request an appeal with the IRS’s appellate division (but beware, the interest will accumulate during the appeal process).
If you’re one of the millions of taxpayers unlucky enough to get audited, you’re not alone. One out of every eight millionaires was audited in 2011 alone.
The IRS can initiate collection actions like wage garnishments or bank levies if you don’t pay your back tax debt. That’s why you’ll want to go with a tax attorney.
A tax attorney or tax professional can also ensure that the IRS doesn’t violate your rights. During an IRS audit you’re entitled to professional and courteous treatment, a private and confidential process, the right to know why the IRS is asking for your information and the consequences if it’s not provided, the right to appeal, and the right to hire a tax attorney.
A tax attorney can also help you obtain an IRS agreement that works in your favor. An IRS audit isn’t pleasant, but finally resolving your tax debt can be.