So it looks like the IRS wants to take a closer look at your 2018 tax return. Don’t panic. First and foremost, even the most thorough CPA can make a mistake or overlook a filing error. Secondly, while unavoidable, an audit isn’t the end of the world. Plus, there are certain steps you can take to make the entire process a little easier for everyone.
- Be brief: Talking too much is a very common mistake and costs people big money during audits. Auditors are trained to listen to everything you say and revealing too much can lead to the auditor looking at other tax years that weren’t covered with the initial audit.
- Do not lie: Be completely honest. While this may seem obvious, it may not be as obvious that the IRS may ask questions they already know the answers to in order to see how much they can trust you.
- Do not volunteer additional info: If you show the auditor other tax returns and they see something that they don’t agree with, they have the right to make adjustments on that tax year even though it wasn’t covered with the initial audit notice. Only bring in the documents that are stated in the IRS notice.
- Have all required support: Going into the audit with all the required documents and having it organized can make the auditor realize that you are willing to cooperate and make things flow smoothly.
- Be yourself: Not only is your tax return under review, you are under review as well. The auditor will observe your actions and if something doesn’t seem right it may cause more problems for you, so try to avoid coming off as if you having something to hide.
- Never surrender original documents: The IRS is known for losing documents, which will not be an excuse for not having proper support. If the auditor wants a copy of one of your original documents, be sure to make a copy and keep the original.
- Understand “substantial compliance“: If you have enough proof that you did follow IRS tax laws, but your documentation is lacking, they may allow the deduction to be taken. Files get lost and few people have perfect records.
- Appeal the audit: It is your right to appeal an examination report if you do not agree with the audit. If you are having troubles making your point then you can choose to meet with their manager, appeal with the IRS, or go to tax court.
- Delay the audit: If you are dealing with a particularly difficult auditor, request a recess. Often, an auditor’s performance is based on the number of cases that they close, so if they know you are going to delay them they can possibly lighten up a bit to allow the audit to move forward on a better tone.
- Record the audit: You are legally allowed to record your audit as long as you’ve let them know in writing ten days prior. When a particularly difficult auditor knows all proceedings are being recorded, it can help limit abuse and create a more professional environment.
- Hire a tax professional: Last but not least, a tax professional can represent you before the IRS. A qualified tax professional is well versed in audits and aware of IRS tactics.
If you want to ensure a better out outcome with the IRS, it is always in your best interest to hire a tax professional. In fact, if you even mention wanting to confer with a professional, the auditor must legally grant your request. And regardless of whether or not you hire one, the request will end the audit for the current session.
If you’ve received the dreaded letter from the IRS, we recommend at least consulting with a tax professional. Accountant on the Go offers financial and tax services scaled to fit the needs of your business or personal tax needs. So, if you or your business are being audited by the IRS, call us today and schedule a time to review your options. Or if you’d like to have Accountant on the Go represent you throughout the course of an audit, call us at 631-547-8811.
Take a deep breath. Even a tax audit will sting just a little less with Accountant on the Go on your team.