Getting an official letter from the IRS can put anyone on edge. You probably want to know why your records were flagged, or whether there’s been a mistake. It can be extremely complicated to navigate a tax audit. If you don’t know what you’re up against, the situation can turn from bad to worse. Taking a closer look at how the process might go can help you analyze your own risks and determine whether you need to call a professional.
Audit Records and Deadlines
When you’ve been selected for an audit, there will be a few key steps that you’ll need to follow. Typically, the IRS will provide you with a written request to see certain documents, like receipts and bills, loan agreements, and other legal documents to compare against your tax return. It’s important that you send all of the information they want. If you’re missing specific files or records (or even ignoring the communication with your IRS auditors), then it’s safe to assume you’ll be stuck with additional taxes. There could even be a 20 percent penalty for negligence.
You’ll also need to watch the calendar to make sure you don’t miss a response deadline. These are usually 30 days after that original audit request. Missing that deadline could cause the IRS to adjust your tax return without your input, which might then include new taxes or other interest rates and penalties. To make sure things go in your favor and stay legal, you’ll need to be in constant communication.
Concise and Direct Responses
Staying on top of your audit deadlines and sharing the exact documents that are being requested will help keep the process going smoothly. You want to be agreeable to work with and that means the IRS shouldn’t be kept waiting. At the same time, though, you’ll also need to be very pragmatic. Your IRS agent might choose to expand the scope of your audit if one of the documents you share—or even how you respond to a basic question—piques their curiosity.
For this reason, it’s usually best to keep your correspondence and communication “short and sweet.” Staying concise and direct can help ensure that your audit doesn’t get out of hand. But with so many moving parts, it’s normal to feel stressed. That’s why so many people choose to get a tax professional on their side before they follow-up on their IRS audit.
Be Realistic with IRS Audit Help
This might sound obvious, but it’s worth repeating: IRS auditors are trained professionals. Managing an audit on your own isn’t quite like other DIY projects. If you want to be on equal playing ground with the IRS, you’ll probably want to get another professional in your corner.
Working with someone who understands the audit process can help give you peace of mind in the days and weeks ahead. You don’t want to miss any details along the way. (Or give away more information than you needed to, right?) Teaming up with a local tax professional can give you the guidance you need and help you stay calm. Feel free to reach out to us at NSO and Company if you need a hand. We’ll give you the support you need to make it through to the end! Call us to learn more: (317) 588-3131