How To Handle an IRS Audit

Whether it's for a face-to-face or correspondence audit, you have issues if you receive notice for an audit from the IRS.

Correspondence Audit

A correspondence audit is done through the mail. Corrections on tax returns are found by the IRS computers. If so, a notice is mailed to the taxpayer. This IRS notice should not be ignored. If you need to pay additional taxes, take action promptly. Interest and penalties may be added to your bill with delays. If you don't agree with the notice, send your reply and include documentation to prove your case. Keep copies of all correspondence.

Face-to-face Audit

You know you have a face-to-face audit coming up if you get a notice specifying a date and time to meet with a tax auditor or revenue agent or asking you to call them for a meeting.

What to do?

• Respond in 30 days or the IRS will take action and mail you a bill next time.
• Follow directions on the notice to know the specifics of the audit and what information you should take with you.
• It will be easier for you to support your case if you are organized and ready for the auditor's inquiries.
• Missing documents should be replaced. Request duplicates if necessary records are missing. All supporting documents should be available when you go to the audit.
• Do not bring other documents than what was requested. Inform the auditor that the information is at home for inquiries about information not required. The issue will be dropped.
• Do not come to the audit with an attitude. Be polite and courteous even if the auditor isn't. This will work to your advantage.
• Don't give your original documents to the auditor. Have the auditor make copies and return the originals to you if you're made to bring them.
• Stay on task. Answer inquiries with either "yes" and "no." Small talk may lead you to let slip valuable information. The auditor will have reason to believe that you have not reported all your income on your tax return if you talk about major purchases or vacations. This may be an indication to expand the audit.
• Know your rights. You need to know your rights and the audit process. If you believe the IRS is wrong, know how disagree. It's best to settle at the audit but you have the right to request an appeal if necessary.

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Originally posted 2007-12-05 04:09:43. Republished by Blog Post Promoter

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