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How to Survive IRS Audit

So you filed your tax returns and thought all was well only to receive an audit letter from the IRS.  The key in dealing with this is to first and foremost remain calm.  Many taxpayers contact our office in a frantic state after receiving this letter.  Below you will find a series of steps to help you through the audit:

  1. Read the letter closely.  There are several different types of audits, all of which will require a different response.  You need to determine which part of your tax return is being audited.  The IRS typically is only focusing on a few portions of the return.
  2. Get advice.  Reach out to the person who prepared your return and ask if they can explain to you why you are being audited and the process of an IRS audit.  It would also be a good idea if they can provide you with the documents for which they based the preparation of your return on.  Unfortunately most tax prepares are reluctant to help the taxpayer through an audit, or are unskilled in the audit process.  If this seems to be the case you may wish to contact an audit professional.
  3. Paper Chase.  Once you know what the IRS is looking for you will need to gather all documents related to those claims made on your return.  The auditor will typically send you an Information Document Request (IDR) which should direct you towards the documents needed.
  4. Respond to the auditor promptly.  The IRS auditor will set deadlines.  Abide by those deadlines and supply them with the documents they request before the deadline.  Ignoring their requests will only end up in an unfavorable assessment against you.
  5. Only supply them with documents requested.  If the auditor requests specific documents, provide them only with those documents.  You do not want them to open lines of questioning on other issues because you showed them a document that made them question something else.
  6. Be professional.  Remember, the auditor is only doing their job.  Try your best not to be rude or belittle the auditor.
  7. Confused? Get Help!  If you think that you are incapable of handling the audit yourself then you need to get experienced and professional help as soon as possible.  Many taxpayers contact us during or after audits requesting help.  We can provide the best help when engaged early.
  8. Self prepared?  If you used an online program to prepare your return they will not help.  The company will certainly defend its program, that is prepared the return correctly, but not the numbers that you inputted.  You are responsible for the data that you put into their program.
  9. Do your homework.  If you disagree with the auditors assessment, then do your homework and see whether they are correct in their assertions.  The auditors are not always correct.  We have encountered numerous instances in which an auditors reasoning appeared to be facially sound but ended up errant.  There is nothing wrong with arguing – but be sound in your reasoning.

McCauley Law Offices can help!

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