What’s the first thing you do if the IRS calls? It’s a trick question. Do you know the answer?
I’ll tell you the answer in a couple of minutes. Meanwhile, let’s look at who is at risk for an IRS audit:
Schedule C businesses with loss
Schedule C businesses who are considered ‘cash’ businesses
Schedule C businesses with high income
If you are taking a real estate loss and haven’t properly filled out the real estate professional section or worse yet, said you were one and then put down a non-real estate occupation, you’re in the crosshairs.
And what do you do if the IRS calls?
The IRS doesn’t call. They send letters. There is a scam right now that starts with a phone call from someone saying they are from the IRS. And you are about to be arrested unless you pay a thousand or so dollars.
It’s all a scam.
Hang up and report them.
You may get a letter from the IRS, though. What do you do then?
Call your CPA or give us a call.
That first phone call to the IRS auditor is critical. The IRS agent decides based on that conversation how long the audit will be and whether it should include other years or other businesses. The best result is the auditor deciding “nothing to see here” and they move on quickly.
Tax planning requires a strategy. Tax preparation requires a strategy. Tax audits require a strategy.
It may be time for you to get a real honest-to-goodness tax strategist.