How to Handle an IRS Audit
If you receive notice that you are being audited, it's important to stay calm. Here are some tips for getting through an audit quickly and easily:
Take a Deep Breath
It's common to dread an audit and automatically assume a negative attitude. As with all things, a positive and productive attitude will make the experience easier for all involved. Remind yourself that the IRS is not out to get you. Your agent is a person just like you and is willing to work with you.
Respond Promptly
You should typically reply to all government correspondences within 30 days of the request. Waiting longer than this can cause confusion that will only have to be sorted out later.
Answer Questions Honestly
Make sure to answer questions honestly and provide the appropriate documentation. Do not attempt to mislead your agent in any way. Instead, foster a friendly relationship so that you can take care of your business quickly and painlessly.
Read the Entire Notification
Follow any instructions you are given carefully. Also, review all instructions before you begin to fill in any forms or make any changes to documentation. Not doing this right on the first attempt will cost you time, money, and stress.
Organize Your Records
Take a look to see if you have the requested records on hand. If you can't find them, respond promptly. Ask for an extension if you need to have some documents replaced, and remember that you absolutely must have all your paperwork ready to go by the time the audit date arrives. If any documents are missing, your claim could be denied, or you could face a penalty.
Know Your Rights
Be aware of your entitlements and the legality of your deductions. Although it is within your rights to disagree with the auditor, you should remain as neutral and professional as possible while stating your case. If you're not confident in your tax law knowledge, it may be a good idea for you to seek professional representation.
Get Help If You Need It
Certified public accountants (CPAs), tax attorneys, and other IRS-approved tax professionals can appear with you or accompany you during your audit – for a fee. Generally speaking, these professional services can be expensive, but for those who feel they need the help, having these resources available is priceless.
A potential IRS audit is a concern for every taxpayer. But, with a little guidance and preparation, the experience doesn't necessarily have to be unpleasant. If you should ever face a tax audit, prepare yourself to handle the situation as confidently and maturely as possible, and before you know it, the stress will pass.
