Are you worried about an IRS tax audit? Don’t worry—you’re not alone. Many people get audited every year. But don’t panic! There are things you can do to prepare for and ease the process. Knowing how to prepare for IRS tax audits and how to get tax audit help can help you stay calm and focused during the audit.
What Are IRS Tax Audits?
Before we go any further, you should know that receiving an audit letter does not necessarily mean you are guilty of something. A letter simply means that the IRS would like some documentation or clarification regarding an item on your tax return.
But what starts off as a request for more information could turn into an investigation of your finances. This is one of the big reasons you should seek tax audit help as early as possible.
How Do IRS Tax Audits Work?
If you’ve received an audit letter from the IRS, your tax return was likely noticed due to having a mistake or “red flag.” What happens next depends on what the IRS has found.
The IRS will request specific information or documentation. There is a good chance that you will be asked to mail that information to the IRS—you may also be asked to meet with an IRS representative. If that happens, you do not have to attend such a meeting alone. It is within your rights to bring a representative along to provide support during your IRS meeting.
The information that you provide to the IRS may be satisfactory enough to get your audit case closed without any changes. However, the IRS can decide that you owe additional taxes. What’s more, penalties can be tacked on in certain situations. There is even the possibility that your “simple” audit will turn into a much longer investigation that dives into your past tax returns.
With that said, you can contest any changes the IRS proposes to your return.
Important Things to Know About IRS Tax Audits
A typical IRS audit can last up to three months, though it may take longer if you are self-employed or own a small business. The length of the audit also depends on the agency’s backlog and how quickly they can process your case. To reduce the duration, take steps to comply with the IRS and give them all the information they need.
Many people don’t know this, but the findings of a tax audit can often be changed. You will usually have a chance to negotiate and appeal. This can be difficult to do on your own, so consider hiring a representative to get your case escalated or reach a settlement that works in your best interests. The bottom line is that IRS lawyers are often more than willing to negotiate with someone who knows how the agency works.
What Is the Process for IRS Tax Audits?
Every audit looks slightly different, though there is a general blueprint they follow:
- A taxpayer receives an audit letter.
- An audit is conducted by mail or in-person interview.
- The IRS will provide you with a written request for specific documents.
- The IRS will look at records dating back between one and six years.
- The IRS will come to a no-change conclusion, an “agreed” conclusion, or a “disagreed” conclusion.
- You will have the option to comply or contest the decision.
- You can take advantage of appeal or mediation options.
While most audits play out the same way, the IRS can and will change its tactics if it discovers information that requires a deeper dive. Remember, their findings may leave you owing additional tax money to the government.
How to Prepare for IRS Tax Audits
Preparation is key. Copies of receipts, bank statements, and invoices can help you avoid hassles and penalties. You should keep all records that could be relevant during an IRS audit for at least seven years after filing a return, as good records will make it much easier to utilize tax relief solutions.
Of course, one of the best ways to avoid being audited is to have your taxes prepared by a skilled, certified tax professional each year.
What Is Tax Audit Defense?
If you do get audited, you’ll need tax audit defense, a process that helps you protect your interests during an IRS audit. It includes gathering documentation to support your tax return, working with a qualified tax professional, and responding to any inquiries from the IRS. If you are audited, having a strong tax audit defense plan in place will help ensure that the process goes as smoothly as possible.
Do You Need Tax Relief Solutions?
The best way to handle an audit is to handle an audit. You should never close your eyes while hoping for the best once the IRS has singled out your return. Tax Group Center is here to offer IRS audit help at every stage of the audit process. We have a team of licensed tax attorneys, CPAs, enrolled agents, and tax experts waiting to help you get the best outcome. Put industry leaders with 30 years of experience on your side when it counts the most.