Although not at the top of the '10 Best Things To Do' list, an IRS audit need not be the end of the world. With the right planning and team, you can survive.
You go to the mailbox and there it is - a notification from the IRS that you are being audited. Once the blood flow returns to your brain and you come back to your senses, remain calm. This is not a time to panic. Many people have surved an IRS audit and so can you..
Here are some tips and advice on how to survive:
- To fight or not to fight that is the question: First decide whether or not the tax audit is worth fighting over. If the amount is small, you might decide to pay it and be done with it. Fighting with the IRS is not a sport for the weak of heart. It takes time, patience and may take money.
- Respond promptly: Even if you haven't made up your mind as to whether or not you want to fight the IRS audit, respond in the time they have allotted. If you have 30 days, respond within that period of time.
- Hire a team: If you did your taxes yourself and don't have enough confidence to believe that you can win the IRS tax audit battle on your own, get an accountant. While you're at it, hire a tax attorney also. This may prove to be costly so make sure the amount in question is well worth it. For smaller amounts and for low income tax returns visit www.irs.gov and review publication # 4134.
- Let your team earn their keep: Refer all correspondence regarding the irs audit to your professional tax team (your accountant and attorney). Some IRS letters are worded in a fashion whereby your response might provide them with information that is not necessarily in your best interest. Your tax team knows how to answer these letters, forward all correspondence to them. After all you hired them to help you, so let them do their job.
- Compile your tax information: Collect all of your tax returns and accounting records for the years in audit. The more information you provide, the better your team can help you.
- Hang in there: The government has to complete the tax audit within three years of the tax filing. The caveat is if the IRS finds fraud or severe underreporting of income, then the three-year rule is pulled off the table.
It will be a trying time and it may seem like it's taking forever, but with the right team on your side, you will be able to count yourself as one of the survivors. You can survive an IRS audit.
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The copyright of the article IRS Audit in Personal Debt Management is owned by Felicia A. Williams. Permission to republish IRS Audit in print or online must be granted by the author in writing.
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