Do These Five Things FIRST If You Get Any Audit Notice | USTaxAid

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Do These Five Things FIRST If You Get Any Audit Notice

Written by Diane Kennedy, CPA on May 7, 2022

If you get ANY letter regarding an audit (state, federal, income tax, payroll, or other), talk to your tax professional first. I just sorted through over 24 pieces of correspondence regarding what should have been a simple audit. 

Unfortunately, too much was volunteered to the auditor and it’s expanded into a much larger audit now. 

At this point, there isn’t a lot a tax professional can do to roll back the audit scope. You just get through it.

That story is what leads to today’s blog. 

Five Things to Do If You Get ANY Audit Notice

#1: Forward a copy of the letter to your tax pro and ask for advice. Do not respond to the audit request until you’ve talked to a tax pro. 

#2: If the auditor wants to talk to you, be very careful with your answers. Yes/no. Do NOT volunteer information. Do NOT overexplain. Just provide what was asked for. If you don’t know how to answer, just say that you’ll need to check on it (or ask someone) and get back to them. And then respond in writing, not by a voice call. 

#3: If the auditor asks for an item, for example “travel expenses”, always ask if they’d like a sample of those. In my experience, they will always say yes and then give you a number. “Send me 6 invoices” etc. Don’t send everything. You end up expanding your audit and creating more work for the auditor. (Trust me, your auditor is not looking for more work.) 

#4: If the audit isn’t going your way, sometimes the best thing is just to get through it. If the auditor isn’t correctly applying tax law, you have several channels for appeal later. Don’t make it worse by trying to drown the auditor in paperwork. 

#5: Do NOT sign paperwork extending the audit statute of limitations (SOL). Sometimes the SOL is your friend. It’s a hard stop and becomes a starting point for offers in compromise.

Here’s how to Get Your Tax Questions Answered.

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