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Tuesday, August 11, 2009

What Should I do if I get Audited by the IRS?

The first thing that you should do is to remain calm. Too many times, taxpayers act in haste and make more mistakes then are already at the table. Just because you were selected for an audit doesn’t mean that you did anything wrong. It also does not mean that you need to shell out thousands of dollars for a professional, depending on your situation of course.

You can represent yourself in an IRS audit. You may be audited by mail or with a field audit. In any event simply provide the documentation in an orderly fashion as it is asked for. Answer promptly but allow yourself the time to gather the documentation that is needed. Request more time respectively if required but make sure that the request isn’t due to procrastination. Once you find the documents requested, do not send them in out of order. The auditor will assume that the disorganization of the documents represents the way in which you day-to-day business is handled and may result in a larger scope investigation.

After you take your time to assemble the documents in a neat and orderly fashion, deliver them to the IRS auditor or mail them in promptly. Never volunteer more information than is being asked for. This will likely lead into a more complicated audit. Be friendly, but concise. Also, try to not allow the agent to come to your home or place of business. IRS auditors are trained to view the return and your surroundings to see if you are living beyond your means. Inviting them into your home or business could result in a larger investigation as well.

Once all documents have been sent and the audit comes to a close, you will have a report that gives you the results of the investigation. Never sign anything before you understand it. Again, take your time before any agreements and seek professional advice if needed. If you will be seeking the advice of a tax professional, let the auditor know that and inform him that you will get back with him promptly. If you have documents that dispute the findings, such as case law or tax code, contact the auditor’s supervisor and come back to the table. If you still do not agree with the findings, you may appeal the decision or take the findings to tax court. Either way, do not fret, as the report isn’t the end of the rope.
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