The best way to deal with a tax audit from the IRS is to avoid it altogether. But despite your best efforts, you still might receive the dreaded (and unexpected) IRS letter in the mail (the IRS will always initiate the audit process by mailing a letter). If you’re facing an audit, here are some strategies to help you get through the audit and avoid paying the IRS any more money than you have to.
Strategy #1: Don’t Ignore the Audit Notice
Like most other unpleasant things in life, simply ignoring the IRS’ audit notice won’t make it go away. If you ignore the audit notice, the IRS may conclude you owe a tax debt and the next thing you receive from the IRS could be a tax bill.
Strategy #2: Don’t Be Afraid to Ask for More Time
If the IRS asks you for information or documents that aren’t readily available, you can ask for additional time to produce the requested information. If your audit is conducted by mail (and most of them are), you can fax or mail an extension request. This information should be located in the letter you received informing you of an audit. Generally speaking, the IRS will grant at least one 30-day extension if you ask promptly after receiving the audit notice.
Strategy #3: Only Provide What the IRS Asks of You
The purpose of an audit is to confirm the information you’ve provided the IRS is accurate and that you’ve complied with the applicable tax laws. To achieve these goals, the IRS may ask for a wide range of potential documents from you. Commonly requested audit documents include:
- Canceled check
- Legal documents
- Medical records
Only providing what the IRS asks avoids giving yourself more work to do. It also prevents the IRS from spotting a potential issue it didn’t know existed. If you’re lucky, this only leads to a longer audit process. If you’re unlucky, it could lead to paying more taxes.
Strategy #4: Be Polite to the Person Conducting the Audit
Practically everyone hates getting audited and auditors know this. So they’ll cut you a little slack if you come across as annoyed or scared on occasion. But this patience has its limits and remember, the auditor is just doing their job. Part of this job entails a great deal of discretion, such as whether or not to ask for additional information or documentation. So it pays to avoid being rude or mean to the IRS agent handling your audit.
Strategy #5: Do Not Lie During the Audit
Lying to an IRS agent can make your tax situation worse. You might lose credibility with the auditor, which means the next time they need information from you, they might ask for additional information knowing there’s a chance you could be less-than-truthful in your response.
Another reason to avoid lying is because you don’t know what the IRS already knows. So ignoring the morality of lying for a moment, another reason not to lie to the IRS is that they may be asking you a question where they already have a general idea of what your truthful answer should be.
Are you Facing an Audit?
If you’ve received an audit notice from the IRS, there’s a good chance you could benefit from the services of a tax attorney. They can save you time and money and help you avoid making preventable mistakes.
Kienitz Tax Law is here to help you with your tax issues. Schedule your FREE consultation today!