SolveYourProblem
Article Series: Taxes
Help Me Understand My Taxes
What
Can I Expect in an IRS Audit?
Many people are filled with an increased sense
of dread when they learn that they are to be audited by the
Internal Revenue Service. However, it is important to remember
that the more prepared you are, the more in control you are.
Preparation can help lead to decreased anxiety about the events
that are unfolding. IRS Audits are sometimes necessary, and
do not need to be all together unpleasant. Understanding what
will occur can help you to be ready for the different questions
that might be posed and the different options that you have
during the course of the audit. It is important to make sure
that you are honest when you are filing your taxes and that
you will be able to support any claims that you make with physical
proof that you can show auditors, if you do in fact need to
be audited.
First,
a person will receive a notice that they are going to be
audited. An audit is not an accusation against the tax
payer; it is just a check up to make sure that everything is
accurate. Cash businesses are easy targets for the IRS, as
are businesses like lawyers and physicians that do their own
bookkeeping. It is important not to panic when this notice
is received. Sometimes there are face-to-face tax audits, but
actually one third of the audits that are performed by the
IRS, approximately, are done through letters. The IRS simply
writes a letter to the person or business asking for explanations
of certain things that appeared in the person’s tax filing.
Once an acceptable letter is submitted to the IRS explaining
the issues, the audit is typically concluded. Of course, these
are not the audits that most people hear about and are fearful
of. Most people are worried about the sit down audits.
The
notice will typically tell you why you are being audited and this will enlighten you as to what materials you will need
to bring with you. It is very important to stay organized with
your audit materials and have copies handy for the audit meeting.
Some people have also found it helpful to bring with them spreadsheets
that help to illustrate how the tax figures in question were
calculated. It is important in many cases not to volunteer
information to the IRS. Remain courteous, but it is not necessary
to provide any information that was not specifically requested.
Sometimes tax auditors are only concerned with a portion of
the tax filing. If this is the case, you only need to bring
your tax records that are in relation to the portion that is
being reviewed with you to the meeting. If it is a company
that is being audited, then it is important that the owner
sit down and mentally review, if not write down, any different
problems that their company might have come across during the
tax year which is being looked into.
It is also important to remember that you have a number of
different tax rights. This can help you when you are faced
with an audit. Remember that you can have someone with you
and represent you at your tax audit. This can be a lawyer or
an accountant, for example. If you notify the IRS within ten
days of the audit, you can also tape record the audit session.
It is also possible to appeal in a tax collections case. This
can be done for reasons involving tax liens, levies and seizures.
In some cases, it is not even necessary that you be there.
By giving power of attorney to a representative such as an
accountant or a lawyer, they can act in your place and it is
not even necessary for you to be there. The only instance this
does not apply to is when there is a specific summons for you,
from the IRS.
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SolveYourProblem.com : 2007
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