Basically, the
IRS conducts an audit in order to determine if you have
underreported your income and/or the exemptions, deductions and
credits you claimed on your return are valid.
It is possible
to negotiate the issues in question with the auditor.
If at anytime
you feel that the audit is not going well or would like to enlist
the help of a tax professional, you can ask for a recess to acquire
the appropriate consultation.
Do not expect
to come out of an audit unscathed, chances are you are going to be
found deficient in your taxes.
If you believe
your auditor is treating you unfairly or you do not agree with his
findings, you may request to speak with a supervisor.
If you need
more time to prepare for an audit, request it. Delaying an audit
usually works to your advantage anyway.
Read IRS
Publication 1, otherwise known as the Taxpayer's Bill of Rights,
before attending your audit.
Try to keep the
IRS from holding the audit at your place of business or your home.
Request to have the audit held at the IRS office or at your tax
professional's office, if you chose to hire one.
Do not bring
any excess documentation with you that does not pertain directly to
the year in question or was not expressly requested in the audit
notice.
Do not show the
auditor any prior tax returns. He may find reason in these returns
to warrant auditing of them too.
An audit must
be completed by the IRS within three years after the return has been
filed, unless tax fraud or significant underreporting of income has
occurred.
Should the
subject of tax fraud come up during an audit, do not attempt to
handle the situation yourself without the advice and counsel of a
tax attorney. Tax fraud can amount to some serious penalties and it
is most likely in your best interest to seek a formidable alliance
before continuing.
Do not talk
anymore during the audit than is absolutely necessary, especially if
you are nervous. People have a tendency to run amok at the mouth
when placed in a stressful situation and you could wind up with your
foot in your mouth.
If you are
missing receipts or other forms of documentation, you are allowed to
reconstruct them.
Field audits
tend to be much more intense than office audits. If you are denied a
request to hold the audit at a different location, it is probably in
your best interest to hire a tax advisor to help during your audit.
If you disagree
with the results of an audit, you are entitled to appeal the
findings, either within the IRS Office of Appeals or in Tax Court.
