IRS Audit Goals – What Can You Do to Prevent Being "Taken to the Cleaners" in an IRS Audit?
You have just received notice that you are being audited by the IRS. Great, now the IRS is going to be digging into your financial affairs. If you thought you had IRS Problems before, now you know you do.
Your first step is to read the notice. Find out exactly what the IRS wants, which year they are auditing, what kind of audit they are performing, and what documentation they require you to bring to the audit. Also, take observe of the date you need to reply to the IRS by. You are typically given 30 days to respond.
Your number one goal during an audit is to only provide the information pertaining to the specific year and documentation being audited. You do not want to disclose any unnecessary details that would alert the IRS to probe you more.
To help you sustain the information you supplied on your tax return you will need to gather together the following documents for the year being audited:
o Bank statements
o Your cancelled checks
o Receipts for the deductions claimed on the tax return
o Income statement report
o Payment verifications for your mortgage, character tax, donations, etc.
It may take you awhile to get all these documents gathered especially if you have to request some of them from many different institutions so do not wait until just before the audit to start getting organized.
During the audit, answer the auditor’s questions honestly but never talk too much. Auditors are aware that this can happen if you are nervous. Consider using the following statements when answering questions: Yes; No; I don’t ingemination; I’ll have to check on that; What specifically do you want to see? and Why do you want to know?
Present only the documentation requested on the IRS notice. Do not bring anything else with you. If questions arise concerning a different tax year or regarding documentation not requested on the IRS notice, you can simply state that this information is at home.
If you agree with the results of the audit, pay the additional taxes and consider your IRS Problems solved. If you do not agree with the results, you have a right to request an allurement.