Facing an IRS audit doesn’t have to be an intimidating experience. With the right knowledge and preparation, you can navigate it smoothly and confidently.
Being selected for an IRS audit doesn’t automatically indicate you did something wrong. Audits are conducted to verify the accuracy of tax returns and ensure compliance with tax laws. Discrepancies between reported income and information from third parties, high deductions relative to income, or involvement in cash-intensive industries are a few common reasons for selection.
Correspondence audits conducted by mail are the most common. The IRS requests additional documentation to verify specific items on your return. After reviewing the information you provide, the IRS may close the audit without any changes, request additional information or issue a report outlining changes you must make.
Office audits require you to visit an IRS office with your records and are generally more comprehensive. The most extensive and least common are field audits, which involve an IRS agent visiting your home or business to review records in detail.
You have the right to professional and courteous treatment, privacy, confidentiality, and to be informed about why the IRS is asking for information. If the audit results in changes to your tax return, review them carefully.
You can appeal the results if you disagree.
Any audit will go more smoothly if you take action quickly, have well-organized records, and are honest and cooperative. Seek professional guidance. A CPA who can speak with the IRS directly on your behalf may put your mind at ease and help the process move along quickly.
By understanding the process and preparing accordingly, you can handle an IRS audit with confidence. Taxes – and audits- don’t have to be stressful!