December 17, 2015

Denver Tax Attorney   How to Prepare for an IRS Tax AuditMost IRS audits occur because the agency believes there is a problem with your tax return. If you are able to establish that your initial return was correct and complete, you won’t be asked for anything further. If the IRS finds errors, however, then you may be asked to pay the recalculated amount, interest, and penalties.

If you receive an audit notice, there are numerous steps you can take to prepare for the audit and resolve the situation as soon as possible:

Respond promptly

A taxpayer is typically given 30 days to respond to an IRS audit notice. Failure to respond within the given timeframe may result in an automatic increase to your tax liability, or possibly a forfeiture of your right to appeal any decisions the IRS may make.

Gather your documents

Identify what the auditor needs from you ahead of time so you can prepare the proper documentation. After gathering the relevant documents, arrange them by year and type of record. Be sure to only provide copies of original documents.

Organizing your documents properly may help you gain credibility, and show the IRS agent that you are a responsible taxpayer. It will also help the audit process move along quickly and smoothly.

Request for copies of lost documentation

Auditors will not accept reasons that records are lost or missing, so request duplicates from controlling parties if needed. This may involve contacting your doctor or hospital for medical records, or your place of employment for duplicate W-2s or 1099s. Failure to provide the requested documentation may result in the loss of a deduction you may have otherwise been entitled to, thus increasing your tax bill for the year.

If you do not have enough time to obtain the appropriate documents, call your auditor directly to request for an extension to prepare for the audit. Reasonable requests for extensions are usually granted.

Consult with a professional

One way to prepare for an audit is by seeking help from someone trained in tax law. While some individuals feel that they do not need to consult a professional to get through an audit, most people would benefit from asking a tax professional to either help them prepare for an audit or represent them instead.

A tax attorney, CPA or enrolled agent are allowed to represent you at an IRS audit, and are likely to represent you better than you can represent yourself.

Don’t volunteer information

In an audit, it is important to remember to keep your answers short and straight to the point. Don’t offer more information than requested or answer a question that isn’t asked. Also, avoid providing more documents than what is requested of you.

Take the audit seriously

When dealing with IRS agents, it is important to be cooperative, pleasant, and courteous. Dress and behave professionally, and arrive at your appointment on time.

Remember that the audit needs to be taken seriously and that you are speaking with a person of authority.

 

 

Categories: Blog, IRS, Taxpayers' Rights