One of the first emotions people feel when receiving a tax audit – panic! Wouldn’t it be great if there were certain steps for people to follow each year to guarantee an audit- proof tax return?
Well, there are certain measures taxpayers can take to decrease the likelihood of an audit from the Internal Revenue Service. Step one: be honest about statements and taking deductions. Then check, recheck and be sure to sign the dotted line. Also, be wise about whom you choose to handle your tax returns. Allied Tax Advisory Group is lead by a former IRS agent who has the knowledge and professionalism to help you avoid, or handle an IRS Tax Audit to ensure the best outcome. We will properly guide throughout the process so you can remain confident and in control every step of the way.
Here are a handful of tips from Allied Tax Advisory Group:
Carefully Review the IRS Letter
The IRS Notice comes through the mail (not by phone or email). The letter will identify certain items on the tax return that are in question and will request certain documents to be sent back. The taxpayer has 30 days to respond to the notice. It is best not to delay if there is money owed, the debt will continue to increase and accrue interest until the issue is resolved. Before a taxpayer responds, he or she should contact a tax professional.
The first thing a tax professional will help you find is the main reason behind the audit. It is possible that it is random, or it may be certain mistakes made on your tax return. The tax professional then begins their own investigation, going through the entire tax return with you to look for any mistakes, misrepresentations or bookkeeping errors. One the root is determined, the tax professional with proceed forward more efficiently and appropriately.
Gather your Documents and Materials
In general, it is good practice to keep your records year round just in case. Documents such as bills, receipts and income statements should be in an easily retrievable area. If certain paperwork cannot be located, ask for duplicates. For example, you may contact a previous employer for your W-2 or 1099s. It is important to not provide the IRS with more than what they request.
Your tax professional may assist you in gathering each material related to your taxes including your deductions, expenses and income. They will also help you in determining what is necessary to send in the IRS proceedings.
Handle the Deadlines Assigned by the IRS
The IRS is very serious when it comes to deadlines and it is important to meet these deadlines set forth. Your tax professional will ensure that all the necessary work is completed before the deadline including filing the paperwork, confirming IRS audit notice responses, and scheduling the proceedings. For in-person audits, it is best to have a tax professional go with the taxpayer or go on their behalf. An enrolled agent or CPA understands the tax code and is savvy about the entire audit process. Certain questions may come up by the auditor, and the tax payer is equipped and ready to answer these questions on the clients behalf / best interest.
To begin the process a Form 2848 (Power of Attorney) will be signed by the individual, authorizing the Enrolled Agent or CPA to act on a person’s behalf.
Treat the Auditor with Respect
Although this may not be your ideal situation, it is important to be professional and respectful through the entire process. If you would like to be treated fairly by the IRS, you must do the same.
The tax return was thought to be correct upon its filing, and records support this contention. It’s important not to hide information, but not to spill the beans either. Be confident in your responses and answer the questions asked.
If you are facing an IRS Audit or Tax Dispute, consult with a professional and gain some advise regarding the settlements and penalties involved. After going through your case, we will be able to tell you if the audit is in your advantage or not. We may also advise you about the potential penalties that are at hand. Consult with an IRS tax professional today to end the panic, take off the burden and enjoy life to the fullest!