We all dread having the IRS tell us it wants to reassess our tax return. The chances of being audited are very slim, but if you receive an audit notice from the IRs, there’s no need to hit the panic button.
The good news is that an audit doesn’t have to be a painful and invasive process. Here are some useful tips to help allay all your fears and deal with tax audits.
Don’t ignore the letter
You’ll be given 30 days to respond to an audit notice. Be sure to respond in a timely manner. Ignoring the notice or delaying your response allows potential penalties to add up.
Prepare financial document
You should always hold on to documents regarding taxable income, tax deductions and other credits to back up the return. Start collecting any relevant paperwork once you find out what parts of your tax return are in question. You are allowed to reconstruct records if you are missing receipts or other documents.
If you want to get the process over with fast, be sure to provide exactly what the agent asks for. Providing additional information will only lead to new potential questions and end up slowing the process.
Experienced tax professionals know the audit procedure. They can help keep the audit on track, guide your responses and tell you what to expect. They also know how to represent your arguments to the examiner and prevent you from making mistakes.
Know your rights
For the actual appointment, you can attend by yourself, with a professional by your side or ask a representative to attend in your place. You also have the right to conduct the audit at a time and place that is convenient to you. If by the end of the process you find that you are unhappy with the result, you may appeal within the IRS or go on to tax court. The more rights you assert, the better off you will be.