WHAT SHOULD I DO IF I AM AUDITED?
Once you send off your tax returns you can breathe a
long sigh of relief. Now all that's left to do is wait for
your refund if you are lucky enough to be receiving one.
However, if you did not file your return properly, you may
set off red flags with the IRS with the end result being an
audit. It is important to note that no matter if you prepare
your own tax returns or utilize an accountant, there is
always a chance that you will get audited. The information
below will help prepare you in the event that you receive an
audit letter from the IRS.
NEVER IGNORE ANY LETTERS FROM THE IRS! If you have
never been audited and are concerned, learn what you can do
avoid an audit.
The IRS appreciates effort to resolve the issues and
evidence that you understand tax laws. So you will have some
homework to do. As soon as you receive the notice about your
audit, make it your business to educate yourself about
tax laws related to the
specific topic/area of your audit.
Consider Hiring a CPA For Help
Since the tax laws associated with your audit may be way
over your head, you may want to consider hiring a CPA for
help in representation and getting your material together. A
qualified certified accountant has experience dealing with
the IRS. The money spent on a CPA could save you a lot of
money in the long run. Also, if the stress of an audit is
more than you can handle, then you can give power of
attorney to a tax attorney or a CPA and they can represent
you at the audit without you being there.
Don't wait for the last minute to get ready for
your audit. Give yourself plenty of time to research and
assemble your paperwork so that you are well equipped and
ready to face this difficult challenge. It may make you feel
better to know that people report the IRS is surprisingly
pleasant to deal with during an audit.
If you realize you made a mistake on your return, be honest
about this. The IRS agents want you to be open and tell them
the truth. If you can't find the original documentation for
a particular transaction, do your best to write down as much
information as you can remember, and tell the agent you
could not find the originals.
Request an Extension
If you need extra time to gather the documents you need, you
can try to get an extension. Although the IRS is not too
lenient in this area, you might be able to obtain up to a
two week extension.
Show Them Only What They Are Asking For
Be precise. The IRS does not want to hear anything extra.
Only speak when spoken to and answer their questions
concisely and to the point. Adding anything additional could
cause the auditor to examine your returns more deeply and
you could be raising a red flag about something else without
even realizing it. All the documentation about the areas in
question, such as particular deductions, must be shown. It
is important to focus on the areas being asked about and
nothing else. Only bring paperwork related to your
particular issues to the audit and nothing else! Too much
information could work against you!
Plan For Having to Pay
You should brace yourself for the likelihood you
will have to pay more taxes and possibly a fine. At this
point you can just pay and get out of there. If you want to
try and lower your payout, you should ask to see a
supervisor to get a second opinion. After that, you can try
to negotiate to a lower amount owed. They will also likely
work out a payment plan in the event that you are unable to
settle the entire debt at once. You may also want to
consider utilizing one of our
loans for helping with payment. We offer affordable
packages for people of all credit scenarios.
You can also choose to appeal the decision. But you will have
legal fees of an attorney to represent you. Clearly,
decisions will have to be made. Which is another reason why
having a CPA on your team during an audit is a very wise
decision. Good luck!
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