Etiquette for a successful tax audit

UncategorizedOctober 10, 20190 Commentsadmin

Every taxpayer dreads the words ‘IRS audit’.  As a taxpayer, you file your tax returns on time, but fear the possibility of being audited. We hear stories of people being audited and how stressful it can be.

Fortunately, over the past few years, IRS audits have been declining.  Also, a huge number of audits are done by mail, which are less intrusive in comparison to office or field audits.  Although the numbers have been declining, one must be aware of certain protocols to smoothen the audit process.

If you have been selected for an audit, below are some points you might consider for a successful audit:

  1. Do not ignore an audit – You have been chosen for audit for a reason and ignoring any notice for audit will only call for additional scrutiny. Take your time to respond but do it within the deadline.
  2. Read the notice carefully– the audit notice has a set of instructions on what action needs to be taken by the taxpayer. The specific area being audited is mentioned in the notice which will help you determine what information to keep ready.
  3. Be systematic – In an audit, specifically in an office or field audit, you will be required to furnish documents related to the area of audit. Organizing your documents makes the auditor’s job easier and can definitely win you some points. If the IRS has requested specific documents, make sure you have them.
  4. Do not carry unnecessary documents– Focus only on the information required in the audit notice. There is no need to bring in additional information. We do not want to trigger the auditor’s curiosity into other areas of the tax return.
  5. Do not submit originals– As a part of audit, you may be required to submit documents to the IRS officer. Give copies of the documents and not the originals. In case you submit the originals and they are misplaced by the IRS, you will lose this information since IRS will not be held responsible for it.
  6. Give only relevant information- The auditors are skilled to obtain substantial information from the taxpayer in what may seem a simple discussion. Always stay on point and keep your answers brief. Offering or giving away unnecessary information may give the auditor a reason to expand the scope of the audit.
  7. Be polite and respectful – You want the auditor to be willing to see things in your light. Being aggressive or argumentative will only lead to contrary behaviour. Be courteous, polite and respectful.
  8. Lying will get you in trouble – Lying to an IRS office is a crime. As a taxpayer, you should be able to substantiate your tax return position. If not, you need to prepare yourself for a tough audit battle.
  9. Meet the deadlines- The audit will not go on forever. There are deadlines to respond, to provide information and to petition your case. Avoid hurdles by meeting the deadlines.
  10. Know your rights – As a taxpayer being audited, you should be aware of your rights. You may disagree with the auditor at the initial level and may want to escalate your case to the higher authority, which is the IRS Appeals division.

After the audit is over, keep the records for minimum 6 years, and more if required.

I always tell my clients that an audit is an education and learning event.  It is an opportunity that helps you to learn about your record keeping and how to improve them.  Remember, auditors are people too, who also have jobs to perform.  Always be respectful.


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