What’s the first thing you should do when you get an IRS audit notice? No, the answer isn’t panic. In fact, if you do these three things before you call the auditor, then your audit may end up lasting just a few hours, instead of days, and the amount of documents you need to produce may be dramatically reduced.
We always recommend that you first talk to a CPA or EA before you contact the IRS. In fact, you may decide to hire a tax representative to handle all of your IRS conversations. That is generally what we recommend with our clients. The fact is that the IRS can be scary and sometimes you may feel that you need to explain more than you should, opening additional audit doors for the IRS to peer through. An objective professional can avoid getting too emotional and knows where the potential pitfalls can be.
Either on your own, or with your tax representative, here are the three things to do if you get an IRS audit notice.
#1: Read carefully what they are auditing. What year. What entity.
#2: Review the IRS audit handbooks to determine what initial interview questions you will be asked. NOTE: The material may be a little difficult for a novice to navigate. A simple, lowcost way to get professional, experienced CPA help is to join the USTaxAId Coaching program. Ask your questions and get answers in twice monthly coaching sessions for just $67 per month.
#3: Strategize and practice before your call. Answer ONLY what’s asked. Never volunteer. Your goal is to shrink the scope of the audit by demonstrating your command of the tax law and your excellent records. (Don’t worry if your records aren’t perfect right now. Spend the time before you talk to them pulling together everything you need.)
The most important Audit conversation you will have will be that first call. Put your effort and attention there. It will pay off in the end.