Understanding the Audit Process

If you’ve received a notice of audit from the IRS, here’s a few things you should know to ensure that your experience is as painless as possible. The last thing you want to do is ignore the request for documentation. Even if you don’t have what’s being requested, you can avoid further problems and unnecessary expense by making contact with the examiner and requesting additional time to comply.

Be mindful that just because you’ve been selected for an audit does not automatically mean you’ve done something wrong. Tax returns are selected a number of ways to include random computer selection, document matching, or related examinations. The IRS protects taxpayers by providing certain rights, as it relates to audits. The first being, “the right to professional and courteous treatment by IRS employees, a right to privacy and confidentiality about tax matters, a right to know why the IRS is asking for information, how the IRS will use it and what will happen if the requested information is not provided, a right to representation, by oneself or an authorized representative, a right to appeal disagreements, both within the IRS and before the courts” (Irs.gov/pub 1). If you experience an issue regarding your rights as a taxpayer you may contact the taxpayer advocacy for assistance. The possibility of being audited is one reason why it is important to retain records in support of your credits and deductions for three years from the date of your return(s). One of the most difficult aspects of going through an audit is having to gather required documents to substantiate your position. Remember, audits are conducted to document what’s on your return with proof. Not having needed records could result in adverse or otherwise unwarranted outcomes that could cost you money.

Generally, audits are conducted by phone or in person at your local IRS office, your home or office, or your tax professional’s office depending on your situation. The IRS will send audit notification by phone or mail, providing ample time for you to prepare. If your audit results in changes made to your return, said changes will be thoroughly explained and you will be provided instructions should you choose to appeal IRS findings. If you agree with IRS audit findings you will be asked to sign the examination report, or similar form. If you find yourself with a tax liability after being audited and cannot make full payment, the IRS offers several payment options designed to assist tax payers with financial hardships. Please refer to Publication 594 at irs.gov for more information on the collection process. Remember, don’t fear the IRS respect them. In most cases, negative outcomes derive from ignoring notices and/or failing to ask for help when you need it.

If you find yourself in need of audit representation, or facing any other tax issue please call Advantage Tax Services, Inc. at (888) 818-7219