Surviving an IRS Audit | USTaxAid

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Surviving an IRS Audit

Written by Diane Kennedy, CPA on December 11, 2007

No one likes to think about getting audited, but what happens if you do? Read on to learn how to survive an IRS audit.

You’ll first find out that you’ve been selected for an audit with a letter. Don’t ignore it. Don’t put it in a drawer and hope it goes away. Instead get ready:

1.  Call your CPA. He’ll most likely want you to fax over a copy of the notice to review it with you. We always advise our clients to let us handle the audit for them.

2.  Why were you selected for audit? Pay attention and focus on the specific items that the auditor wants to focus on.

3.  What type of audit are you getting?

  • A correspondence audit: This is for minor mistakes and requires only that you mail certain information to the IRS. For example, maybe you forgot to attach a Schedule C to your income tax return. The matter will be closed if the IRS is satisfied with your paperwork.
  • An office audit: Here, you’d typically bring your tax-related records to an IRS office for examination. For example, if you claimed an unusually high deduction for medical expenses, the IRS may want to see your medical bills and canceled checks, among other things.
  • A field audit: Here, the auditor generally visits your home or business to verify the accuracy of your tax return. It may be possible for the auditor to visit the office of your representative, instead.

4.  Know your rights. You have several rights when you’re involved in an audit. These include:

  • The right to an explanation of the audit process
  • The right to representation by an attorney, CPA, or enrolled agent
  • The right to claim additional deductions that you didn’t originally claim on your tax return
  • The right to request an opinion from the IRS’s national office on specific technical issues that arise during the audit

I’ll post more tips tomorrow.

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