IRS Tax Audits
The idea alone of being audited by the IRS is something that many taxpayers dread, but when a dreaded tax audit becomes a reality, it can suddenly start to get very overwhelming. Dealing with the IRS, especially in relation to a tax audit, can be stressful, but it’s important not to panic! While it’s true that many businesses and individuals are selected due to tax examinations, some are simply selected on statistical data from a computer screening, and others are picked completely at random.
Going into a tax audit, it’s essential to remember that the IRS isn’t perfect, they do make mistakes and there’s certainly no guarantee that they’re going to be right about your audit. If you’re audited by the IRS there are many things that you can do to stay on top of the audit, minimize the stress of the experience, and achieve the best outcome.
Whether you’re worried about the potential of an audit, or you’ve received a notification from the IRS regarding a tax audit, read on for everything you need to know about what to do next…
Read Up on the Tax Audit Process
First things first, if you’re unfamiliar with the tax audit process, then it’s vital that you do your research, starting with your IRS audit notice. While there’ll be no explanation covering the reason for the audit, there will be details included covering the exact section of your tax return that’s under investigation and which documents you’ll need to prepare.
It’s best to take your time, read the notice thoroughly, and get a good idea of the section that the IRS has raised questions about. Then start to research the area of tax law pertaining to the audit and your rights during an IRS audit. For example, you have the right to:
- Receive courteous treatment
- Be told why information is being requested
- Be told how your information will be used
- Have full confidentiality
Be Proactive in Your Response
One of the worst things that you can do during an IRS tax audit is nothing. As soon as you receive a notice, it’s vital that you’re proactive in your response. Being proactive comes with many benefits, such as having enough time to get everything prepared before the deadlines start to become tight.
During an audit, it’s often possible to request an extension, but this is normally only a one-time opportunity, and will only give you an additional 30 days beyond the standard 90 days that you’re given to prepare your response.
When it comes to tax audits, more often than not the resolution will involve paying more, so giving yourself the time to form a strategy is incredibly important. Well-thought-out correspondence with the IRS will help you to achieve a timely solution and avoid costly penalties for missed deadlines, as well as giving you the time to negotiate a deal if you wish.
Get Prepared & Collaborate
Preparation will be an important part of the auditing process, and mostly center around document preparation and, if applicable, interview preparation.
The IRS can request a large number of records from you, normally from the previous three years, but the investigation can cover up to six years of records, and sometimes longer. Some examples of what the IRS may request, include:
- Receipts
- Medical records
- Canceled checks
- Bills
- Loan agreements
In the case of a mail audit, the IRS will request information via mail regarding different areas of your tax return, such as income. When audits require an in-person interview, you may need to bring your documents to the interview – where possible, it’s best to arrange an interview at an IRS office to prevent the interview occurring at your home or place of work.
Collaboration is very important during the IRS process, but that doesn’t mean that you need to volunteer additional documents that weren’t requested or move off topic. Only provide what the IRS has requested, answer questions honestly and exactly, and make sure that you have a second matching copy of your documents for easy reference.
Professional Tax Audit Representation Services in Chicago
If the Internal Revenue Service (IRS) begins auditing you or your business, then it’s important to remember that you’re not alone! There are professionals that deal with IRS tax audits every day, and they can help you as well.
APA Financial’s Tax audit representation services, also referred to as IRS audit defense, is a service that you can use to take the pressure off your shoulders by having a professional step in and represent you during the tax audit process.
IRS Tax Audit Defense Services in Chicago
Through tax audit defense services, you can hire a certified public accountant or attorney to stand in on your behalf at virtually every stage of your tax audit. In your stead, your chosen tax representation service will be able to:
- Create a Strategy– Tax audits can be a complicated process, with professional representation, you’ll have a clear strategy outlining how best to proceed with your audit.
- Prepare Documents– Document preparation is an important aspect of the tax audit process that you representative will be able to help and advise you with.
- Deal with Correspondence– On your behalf, your representative will take care of correspondence with the IRS and can also attend any in-person meetings with the IRS.
- Represent your Appeal– If a resolution can’t be achieved during the examination stage of an IRS audit, then you may decide to make an appeal. Appeal representation services can support you during this process.
There’s no requirement to enlist the help of professional tax audit services when dealing with an audit from the IRS, but it can be a highly beneficial decision. Not only will an expert in tax law be able to help you gather everything you need for your audit and review it, but with advice and guidance through every step of the process, you’ll have a much better chance of avoiding common mistakes and achieving a successful outcome.
Being audited by the IRS may be daunting, but if you take your time doing the required research and work proactively or get advice from experts who have years of experience with IRS audit defense, you can turn a stressful experience into one that’s easily managed.