Tax season has come to an end and now audit season is about to commence. People always fear that they will be audited, but in reality the chance of being audited is fairly low. About 1 out of 100 people are actually audited. Read below on how to endure an audit.
However, if you do happen to be one of the unlucky people, here are a few easy steps to take to make the process go smoothly:
Don’t Ignore Mail From the IRS – Although it may be frightening, it is always best to open mail from the IRS. It is best to face the problem head on and resolve the issue. You are usually given about 30 days to respond to the letter. Keep in mind that if you ignore such information, the IRS will simply keep adding penalties to the amount owed.
Contact a Tax Professional – You will want to a hire a tax professional to represent you and to communicate directly with the IRS on your behalf. Tax law is very complicated so, in the case of an audit, it is important to hire a licensed CPA or other tax professional that specializes in IRS audit defense representation. It is important to keep your tax preparer up to date on everything as well.
Get All Records and Documentation in Order- Find out what part of your tax return is in question and gather all of the necessary paperwork. All tax documents should be kept for three years but, if you are missing a file, you can always get a copy. If you have lost a receipt, you can usually get a duplicate copy depending on the type of business that issued it. For example, doctor’s offices and charity services usually keep good records and will be able to supply you with a copy of your receipt.
Remain Calm – One of the best pieces of advice for handling an audit is to be polite and respectful to your assigned IRS agent. It is never helpful to begin an audit by being rude and difficult. The process will be much smoother if you approach it with the assumption that the IRS agent is simply doing their job. Also, no matter what you do, do not hide or cover anything up. It also will serve you well to be upfront and honest.
Tax returns are selected for audit in a variety of different ways including random sampling. If your return is selected for an audit, it is important not to panic and to realize that many IRS audits can result in the acceptance of a return without change or perhaps even a refund when they are handled properly. When faced with an IRS audit, selecting a qualified Certified Public Accountant to provide IRS audit defense is well worth the investment.
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