Although you provide your contact details and email address to IRS, you hope they never contact you. Of all the messages you may receive from the IRS, an IRS audit notification is the most heartbreaking.
Your mind immediately starts picturing prison life, especially if you suspect that you have made any tax mistakes.
Ideally, you have less than a 1% chance of getting audited by the IRS. In case you fall among this small percentage, control your panic since the high chances are that everything will be okay.
However, even if you feel that you have not defaulted to any tax laws, you need to brace yourself for the IRS audit session to ensure everything goes well.
Here is how to survive the IRS audit without getting into trouble.
Respond to the Audit Notification
After IRS sends you the audit notification, they give you about 30 days to respond. The response required could be mailing some documents to support deductions that you have made.
Additionally, they may need you to present some documents to an IRS office. If you don’t have all the information they have required, contact them and request an extension or reschedule.
Failure to respond to this notification forces the IRS to adjust your tax liability, which results in a bill.
Prepare Necessary Documents
There are many documents to prepare after you receive the IRS notification. The exact documents you prepare are determined by what IRS is investigating.
It may include legal papers, mileage logs, loan agreements, proof of employment, bills, and receipts.
You can request more time to prepare these documents if you don’t have them all at hand. Double-check the accuracy of the details of the information provided in the documents to avoid a costly and time-consuming auditing process.
Understand Your Rights
No matter how much power the IRS auditor has, remember that you have some rights to protect yourself during the audit process. Understanding these rights will help you outstand the auditors who may want to take advantage of naïve taxpayers.
- Right to privacy and confidentially of tax matters
- Right to a professional treatment from the IRS audit officers
- Right to representation either by yourself or authorized representative
- Right to information of why the IRS needs the information they are requesting for, how they intend to use it and what are the repercussions of denying them the information.
- Right to appeal disagreement either before the court or within the IRS
- When sending the initial IRS audit notification, IRS sends a document detailing these rights.
Remain Calm When Addressing the Auditor
Although your emotions could be heightened when getting audited by the IRS, don’t take out your frustrations on the auditor. Insulting them, whether verbally or physically, could cause you a lawsuit.
Therefore, no matter how unreasonable or uncourteous the auditor is, strive to hold your peace and remain professional.
Remember they are doing their job and you should give the respect you also expect to have in your job. Sure, there is a thin line between defending your position and being argumentative and disrespectful to the auditor.
Nevertheless, strive to strike a balance between the two to help ensure that the process is a success.
Hire a Professional
It may seem easy to handle the IRS auditors, especially if you are an honest taxpayer. However, as much as this confidence is helpful, it is better to get ready for anything the IRS may throw at you by hiring a professional.
The professional you hire could be a tax attorney, an enrolled agent, or CPA. This professional will help you better understand the reasons for the audit, what happens when you get audited by the IRS, and your rights when you get audited.
They help you avoid common pit holes that could end you in prison.
Moreover, they help you stand up to an unfair auditor without being rude or argumentative.
Click here to see some of the best professionals to walk with through the IRS audit journey.
Be as Precise as Possible
It is tempting to provide as much information as possible to the IRS auditor to prove your innocence. However, as good as this idea may seem, it ends up causing more harm than good.
For this reason, don’t offer the IRS auditors any information that they have not requested. Giving them too much creates room for them to find something that they can use against you.
Additionally, in case of a friendly conversation with the auditors, be careful not to overshare any details.
Don’t Host the IRS Audit Sessions
In some cases, the IRS auditors may request an in-person meeting for the audit. When this happens, don’t allow them to audit you in your home or business premises.
Like oversharing, this is risky since they may come across something that could lead you to trouble. Therefore, ask them to meet you elsewhere, for instance, in their office or your attorney’s office. Don’t be afraid of being selfish with your house as this will save you a fortune.
What happens when you get audited by the IRS? Lying to get yourself out of trouble may cause more harm than good in an IRS audit. For this reason, to gain the auditor’s trust, be as honest as possible.
Remember, they could ask the question they already have answers to see how honest you are. Allowing the IRS auditors to think that you are dishonest is one of the worst things during the audit since it will make them dig even deeper.
Therefore, prove their suspicions of you being a liar wrong by offering them all honest answers. After all, it is easier to get out of trouble after giving an honest answer than a dishonest one.
Have You Received an IRS Audit Notification?
It is no secret getting audited by the IRS can be a nightmare even to the most compliant taxpayer. Thankfully, if you are well prepared, you are properly armed to handle everything that may come your way.
Consider seeking help from an enrolled agent, CPA, or tax attorney to help make the process as smooth as possible.