Weekly Tax Advice: Tips for Surviving an IRS Audit

Posted on March 3 2014

If you're like most taxpayers, the word "audit" will send shivers up your spine and cause your heart rate to jump by at least 20 beats per minute. The idea of having the Internal Revenue Service single out your tax return and require verification of information can be scary, especially because you could be facing penalties and an additional tax bill if they find anything wrong. If you receive an audit notice, these tips can help you survive an audit and come out in the best position possible.

Gather requested documentation and nothing more: Your audit notification will spell out exactly what points on your tax return are up for dispute. Collect all of the documents that support the information you entered on your tax return, this may include receipts, business records, or investment statements. Once you have this documentation, organize it and attach notes showing the calculations that led you to arrive at the numbers you entered on your tax return. Leave behind anything that is not directly relevant to the audit notice. If the IRS didn't request the information, you don't need to provide it, and you could hurt your case if you do.

Find missing documents: If while gathering your documentation you find that you don't actually have all of your receipts, now is the time to hunt them down. Take the time to request a new copy of your charitable contribution statement from an organization or get an invoice that you're missing for your business. Don't expect your auditor to give you the benefit of the doubt if you can't produce these documents for an audit.

Make copies of all documents: You never want to mail original copies of documents to the IRS or leave your originals there. The IRS is not responsible for lost or misplaced documents, and you could find yourself in a tough spot if they lose them. Always keep your originals so you can produce additional copies later if another request comes your way.

Get professional help if needed: In some cases, you may feel like you are not qualified to handle an audit because you don't know the details of the tax code. You have the right to seek professional help for your audit from an attorney, CPA, or registered tax preparer. These professionals know your rights as a taxpayer and can help you get the best possible results from an audit. If you opted to purchase audit protection through AuditGuard when you filed with OnePriceTaxes, you have full use of your own team of tax experts to walk you through each step of the audit and advocate on your behalf.

Take your time: Don't be afraid to request for the audit to be postponed if you are not ready. Rushing and missing important details could leave you with an unfavorable result. Instead, take the time you need to gather all of your paperwork and get organized prior to your audit. It is easy to contact the IRS and request more time if you need it.

Complete the audit by mail or at the IRS office: The IRS offers up to three options for how to complete your audit: by mail, at an IRS location, or at your home or workplace. Unless you are required to have the audit at your home or workplace due to business income, opt to keep the IRS out of your territory. You are much more vulnerable in your home, and it's much easier to stick to just the topics at hand when you bring only the needed documentation to the IRS.

Be courteous: Just because the IRS has a bad reputation and you aren't happy about being audited, that doesn't give you the right to be rude to your auditor. Your auditor is a person who is just doing his or her job, and belligerence won't help you in an IRS audit. Keep a level head, avoid being overly defensive, and conduct yourself as you would in any other type of formal business meeting.

Keep your answers brief and on point: You don't need to make friends with your auditor, and in fact, you can hurt yourself by talking too much. Give only the information that has been requested, and stick to simple yes or no answers unless the auditor requests explanation. Anything you say during an audit can send up red flags to trigger a more in-depth review of your tax return.

Appeal the results if necessary: When you get the results of your audit, look over them carefully to determine whether they are accurate. You have the right to file an appeal within 30 days if you believe the audit result is incorrect. Another option is to contact the auditor's supervisor to see if you can reach a compromise without having to go through the official channels for an appeal.

As the saying goes, prevention is the best medicine, and the same is true of an IRS audit. The easiest way to survive an audit is to not trigger one in the first place. Accurately report all of your information to avoid sending up unnecessary red flags. In particular, be attentive to reporting all income from W-2 and 1099 forms because the IRS receives a copy of each of these and will know if you are under-reporting income. Getting organized prior to completing your tax return and paying attention to the details during the process of filling out your tax return at OnePriceTaxes can help you prevent an audit and avoid the headaches.

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