Facing An IRS Audit: 6 Tips To Help You Survive
Few things strike fear into the hearts and minds of even the most honest of taxpayers like an IRS audit. Fear not, though, as you can survive this dreaded ordeal by taking the right steps and by following the advice of the right tax advisory service.
1. Don't Take It Personally
Although it's hard not to think the IRS believes you've done something wrong when you receive audit notification, realize you're just a number to them and not someone they are targeting. Your return may have automatically flagged something in their system, and if you really haven't done anything wrong, there's not a lot to worry about. Even if you have done something wrong, if it wasn't blatant and intentional, chances are good that with the right advice, you'll come through this unscathed.
2. Put Your Paperwork In Order
Your audit may be for the most recent return you've filed or go back a couple years, so gathering all the required paperwork could be tedious. Nonetheless, you have to put it all together, right down to the last receipt, and verify the accuracy of all of your claims. Use individual file folders for each subsection of paperwork, and keep it all together in a main binder. Once you're certain you have everything you need to answer the call to audit, make copies in duplicate, separating the original documents from what you're going to send.
3. Go Directly To A Tax Advisory Service
Even if you're on a budget, facing the IRS alone can be risky. The rules and regulations are intricate and often hard to follow in theory, let alone application. You don't want to fall victim to the confusion and fear that is likely to go along with the audit; you need someone on your side who knows all of the rules just as well as the government does.
4. Provide Only The Requested Documents
Because you don't want the IRS snooping through other years of returns, limit what you send to them to the year in question only. Although you may feel like you have something to prove in demonstrating how you always file on time and always with the utmost accuracy, offering up additional information only leaves you vulnerable to additional inquiries.
5. Keep All Replies Short And Sweet
Whether corresponding on paper, over the phone, or in person, stick with "yes" and "no" answers as much as possible. The more you reveal about yourself, your lifestyle, and other aspects of your financial being, the more you might get the IRS thinking. Consider the year they've brought into question as the only topic open for discussion and only answer questions rather than offering new information that could potentially implicate you.
6. Try Not To Refer To Previous Year's Filings
Sometimes, the IRS calls a taxpayer out over something they've been doing for years, and while you're naturally inclined to defend yourself by saying "I've always done things this way," that little revelation will work against you in a big way. Follow the advice of your tax advisor and be completely honest with them, and they'll tell you exactly how to handle the matter at hand without opening up another can of worms for the IRS to investigate.
Have a good advisor on your side for your audit and don't forget to keep your cool. As uncomfortable as your audit may be, you'll make it a lot worse if you conduct yourself in any manner other than professional. Prepare well, even rehearsing responses with your advisor, so you'll be ready for anything the IRS can throw at you.