What you should do if you are being audited?

So you filed your taxes, and you receive a letter from the IRS stating they are going to audit you.

What should you do?  First, try not to panic!  If an audit causes an extreme amount of stress for you, you can hire representation, so that you never even have to talk to the IRS.  Just go about your business and let your professional take care of everything.  A tax professional can also examine your tax documents, and guide you to minimize stress if you decide that you want some advice.

Keep in mind that the most common audit is the Correspondence audit which is normally easily resolved.  If you have documentation, everything should go smoothly.  This usually requires mailing or faxing the documentation requested by the IRS.  Never give your original documentation to the IRS without making copies, and never give more than is requested.

Organizing your documentation shows the agent that you are a responsible taxpayer.  Moreover, it may result in limiting the scope of the audit.  Treat the auditor with respect and don’t be combative, you don’t want to alienate the auditor.

Be as brief as possible; when people are nervous, they tend to talk too much.  Auditors listen to everything that you tell them.  Saying too much can cause the audit to be expanded.

Don’t lie or make misleading statements.  The IRS may ask questions when they already know the answers to see how much they can trust you.  Do not say anything more than is required.

Don’t provide information about other tax years.

Bring only the documents that are listed in the IRS notice.

Bring all of the required support and documentation to show the auditor that you are willing to cooperate.  Be sure that your documentation meets the necessary IRS requirements.  If a mileage log is being audited, research what the IRS requires.

If you are missing documents, the IRS allows you to reconstruct them.

Be yourself when you are being audited because the auditor will observe your actions to see if something doesn’t seem right.  This may cause problems for you.

You have the right to appeal an audit if you don’t agree.  You may also ask to speak to the auditor’s manager.

You are entitled to request audit work papers so that you can review the auditor’s work.

If you don’t like the way the audit is going, you can stop it at any time to request legal representation.  However, be aware that auditors may seem nice in order to get you to talk about things you shouldn’t talk about and admit to things that you may not have an understanding of the consequences.  You need to be cautious with every word that you say.

 

David Zubler is the author of three books and a philanthropist.  All of his proceeds from the books go to a charitable foundation he created for underprivileged children.  He is also the founder of Your Tax Care which provides tax education.