What to do if you are getting audited by the IRS?
Being audited is one of the most stressful and dreaded experiences a business owner can go through. It’s a wonderful blessing to be able to follow your dream and do what you love in life, and paying taxes comes with that privilege, but enforcement is a reality.
Sometimes our actions will increase our chances of an audit but sometimes our it's just our time for audit. It’s difficult to grasp this reality because we typically want to blame someone when a tragedy hits…like an audit…however again, sometimes the IRS is simply going to check your numbers and possible receipts.
Whatever the reason for your audit may be, there are certainly some things you can do that will help you through the experience. Adhering to the following tips and advice will either help the audit progress more quickly, lessen the damage and possibly even encourage the IRS to drop their inquiry. Follow these and you are already starting your audit on the right track:
Don’t ignore the IRS, their letters or notices. - I promise, you just ignoring them won't make them go away. The whole term out of site out of mind does not apply when it comes to your taxes. In fact, by doing this, you can typically make things worse. When you don’t reply to the IRS, they assume the worse and actually increase their scrutiny and it makes your situation far more serious. Is it even worth saying? Don’t ignore the IRS, get help and respond as quickly as possible and don’t miss any deadlines.
Be courteous and kind. - Guess what?! IRS agents and representatives are people too! If you treat them rudely, it’s not going to help. This isn’t your opportunity to vent about how much you hate the IRS or the government. If you personally attack or offend an IRS agent, I promise you they’re not going to drop the case or audit until they have made your experience miserable. Remember, they are just doing their job and making sure that you did yours too.
Build your case. - Don’t think your audit will just solve itself. If you don’t provide support for your numbers or arguments, it’s not going to happen mysteriously on its own. Dig up receipts, statements, emails, bank statements, credit card statements, anything.
Be organized and a lot of information. - More is better. Nothing is irrelevant and deluge the IRS with pertinent information. But don’t just throw the IRS information in a ‘shoebox’. They won’t organize it for you. Get binders, boxes, envelopes, whatever it takes to make it easy to understand and decipher. Along with your respect, this tactic will go a long way in getting your audit resolved quickly and with less damage. This technique is what earns points with an agent.
Get professional help and asap.- This is the most important step!! Don’t think you can take on the IRS by yourself. Every year there are tons of cases closed by the IRS that could have gone so much more in the favor of the taxpayer. The cases with the worst decisions are those where the taxpayers defended themselves. Yes, you might be able to prepare your own tax return, if it’s generally simple, but fighting the IRS is a whole other matter. A professional knows the tips and tricks of how to maneuver through the IRS audit system. They will help you amend your taxes (if necessary), create an offer and compromise, lower your liability or have your case dismissed all together. Just like you wouldn't go into a court battle without a lawyer, don't go into a tax battle without a representative!
Don’t stress. An IRS audit will consume you if you let it. Remember, that as long as you weren’t cheating on your taxes or blatantly deciding not to pay your bill, you’re not going to go to jail. However, you can get on a payment plan OR cut a deal with the IRS under an Offer and Compromise.
The best thing you can remember is that the bottom line is...that this too will pass. Try to learn from the experience all you can. Become a more strategic taxpayer through the process. Re-commit yourself to better bookkeeping. Doing all this will help not only prevent an audit, but allow one to go smoothly if it was to happen.
Need advice on your IRS Audit! Contact us today and we can set up your free consultation with our tax advisor teams!
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