If you get notification of an audit, know that you are not alone. Recent numbers can provide some comfort.
- The Internal Revenue Service (IRS) conducted a reported 771,095 audits in 2019.
- Of these audits, the IRS deemed 13,946 as high wealth audits — defined as taxpayers who report over $1 million in income.
- Small business owners are generally at higher risk of an audit compared to individual taxpayers.
A common question after getting notification of an audit is why? Why did the IRS choose to audit my tax returns? It is important to note that audits can be the result of random selection. A computer algorithm may simply flag your return for further review or may determine that yours falls outside of the norm. Whatever the reason for the audit, knowing the following can help you better ensure a successful outcome.
#1. Check the notification.
First, make sure it is legit. The IRS is most likely to send notification through traditional mail. A phone call or email is highly suspect. Check to make sure it is not a scam before moving forward.
Next, review the notification closely. It will have important information, such as deadlines for response, that will directly impact your options.
#2. You can get an extension.
If the provided due date is not enough time to respond, consider requesting additional time. In many cases, you can do this by faxing the request to the number on the letter from the IRS. This can impact the time you have to petition the U.S. Tax Court to challenge the IRS’ claims.
#3. Know your rights.
Taxpayers have rights in these situations. These rights include the right to professional treatment from the IRS, the right to know why the IRS is asking for information and what will happen if it is not provided as well as the right to appeal when the taxpayer disagrees with the IRS’ findings. You do not have to go through this process alone. The attorneys at Goldburd McCone are experienced in these matters and can provide representation to help better ensure a more favorable outcome.