Learn how to survive IRS tax audit
During an audit, you must convince the IRS that you reported all your income and that every information you provided were correct and that you were entitled to all credits and deductions. These steps are how to handle the IRS audit.
- Delaying the audit
Delaying the audit is big deal if you want to survive IRS tax audit and usually, works in your favor. Ask for more time when you need to get your records in order or for any other reason. IRS audits must be carried out within three years after the tax return is filed unless the IRS finds significant tax fraud.
- Don’t host the audit.
Do not allow the IRS audit to be held at your business or home. Instead, go to the IRS office or you can have your tax expert handle it. If the IRS insists on having the audit at your home or office, call your tax professional. NEVER face the IRS auditor at your place of business or home if you want to survive IRS tax audit.
- Have realistic expectations.
Do not expect to come out of the audit without you owing something – the odds are against you. The average adjustment for the Audit Office (held in the office of the IRS) is $ 4,000; The average adjustment held on the field is $ 17,000.
- Be brief.
Do not give the IRS more information than they are entitled to and do not talk more than is necessary. If you have something to hide, do not provide evidence of auditor, but do not lie. If in doubt or confused about anything consult a professional.
- Do not offer other years returns.
Do not give copies of tax returns of other years to the IRS – if you do and they find something that does not please them, they review those years too. Do not bring any document that has nothing to do with the year under examination.
- Restore records.
If you are missing receipts or other documents needed for the audit, you are allowed to restore them. Try to organize all records that are required for the audit before the audit starts. Organization can impress the auditor that you know what you are doing.
Ask the auditor about deductions and try to defend your positions. Do not try to negotiate the amount of taxes to be paid. Instead, negotiate tax issues – for example, if a certain deduction should be allowed. Also, do not negotiate by telling the auditor that you cannot pay the bills. This is not their business.
- Know your rights.
Read IRS Publication 1, explaining taxpayer’s Bill of Rights before the audit. Research legal tax issues through the IRS free publications and commercial tax guide. If you are still not clear about the tax law or how to present your documents to auditors, consult tax professionals before the audit.
- Consult a tax specialist.
If the problem of tax evasion occurs during the audit, do not try to handle it yourself. At that time, or any time the examination is not going well, you can ask for a break to consult a tax professional. Also, you can ask to speak to the manager of the auditor if you think that the auditor is treating you unfairly.
- Appeal the result.
When you get the examination report, call the auditor if you do not understand or agree with it. Meet the auditors or their manager to see if you can reach a compromise. If this didn’t work, you can appeal with the IRS or go to tax court.