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Responding to an IRS audit

According to the Tax Foundation, 1.2 million Americans had their taxes audited by the Internal Revenue Service in 2015. Predicting who will be audited and why is difficult because tax law changes every year. Additionally, the IRS could change their focus from one group to another annually as new issues emerge.

Although audits are a routine part of enforcement for the IRS and usually aren’t anything to fear, your recognition and response is an important part of the process. Additionally, because of the potential for an unforeseen tax bill, it is not recommended that you respond to the audit without seeking help from a tax attorney first.

The IRS will inform you of an audit with a letter and may request your presence for an in-person interview. Anyone who claims to be from the IRS through an unsolicited phone call or e-mail could be part of a scam.

Usually, the IRS conducts an audit for two reasons:

  • Random screening – the IRS is testing your tax documents to see how they compare to their idea of a statistical norm. They then use this information to adjust algorithms and software in the department.
  • Connection to another examination – the IRS has spotted a discrepancy with another individual or business return and wants a clearer picture of what is happening.

Keep records

The audit notice will contain specific instructions for what to do. Before returning the requested documents to the IRS, talk to an attorney, then make a copy of your audit paperwork and any other material they request. Keep a file for yourself along the way to ensure that you have a record of your compliance.

Don’t face the IRS alone

Once you speak to an attorney and receive a response from the government, the IRS may ask for a correction of your tax documents or bill you for a discrepancy. At this step, you and your attorney can request an extension of the deadline for your response, agree to the request or file a dispute.

Making the decision

If the IRS says you owe money after an audit, you can dispute their claim. It is okay to ask for advice in making this decision because paying a large sum can be costly to an individual or small business. If you find yourself facing an IRS audit, the tax attorneys at Goldburd McCone have many years of experience helping individuals and businesses get through an audit with confidence and compassion.

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