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5 things to know if you’re facing an IRS audit

Understanding the Basics can Help You Prepare When Facing an IRS Audit

What are the 5 things you need to know if you are facing an IRS audit or you’ve received an audit notification letter from the IRS? If you asked a group of people to rank their biggest fears, it’s safe to bet than an IRS audit would be near the top of at least a few lists. Audits can be very scary, especially for individuals and business owners who might not spend a lot of time thinking about tax compliance.

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So, what do you do if you get an audit notice in the mail? First, stay calm and try to process the information you received. Then, consider your plan of action. In nearly all cases, it’s a good idea to talk to a lawyer first. Do not make any statements to the IRS without consulting with an attorney, especially if there’s any chance you might have accidentally or intentionally broken the law.

You might be surprised to learn you don’t have to speak directly with the IRS.  In fact, it is rarely in your interest to do so.  

When facing an IRS audit and in advance of your meeting with a lawyer, it can be helpful to learn some key points about What You Need to Know about an IRS audit and how they work. Consider the following:

Documentation is key:

Another of the 5 things you need to know if you are facing an IRS audit is the importance of organized documentation. Your lawyer will have a much easier time helping you if all your paperwork is in order. As soon as you become aware of the audit, start gathering your tax documents, including any receipts or documentation that are relevant to the audit.

Audits aren’t done at random:

But that doesn’t mean that every audit is justified, either. Often, returns are audited because there is something unique that makes them stand out from other returns filed by similarly-situated taxpayers. However, just because you did something different doesn’t mean you did something wrong. Knowledge is the key to facing an IRS audit.

Tax preparation services aren’t always perfect:

Just because you used a professional tax preparer doesn’t mean your return is perfect. Sometimes, tax preparers make mistakes. In other situations, they may have intentionally skirted the law to try and get you a bigger refund. Your lawyer can bring a fresh set of eyes to the situation to help you determine if your preparer was in error.

The penalties for a violation can vary:

If it is ultimately determined that you owe more tax than you paid, the penalties for that underpayment can vary quite a bit. Relatively minor errors might only carry a small fine, while fraudulent behavior is fined much more heavily. Crimes like tax evasion can result in prison sentences.

You can appeal:

One of the other things you need to know if you are facing an IRS audit is you can appeal.

If you disagree with the result of an audit, you can appeal. However, it is important to recognize that there is a deadline for filing an appeal, so be sure to consult with a lawyer as soon as possible if you aren’t already represented.

It is also important to know that you can only appeal information and data which is in the original audit folder.  As an experienced San Diego tax attorney I can tell you there are many important pieces of information which we must ensure to add to the “file” of the audit.

Taxpayers in the San Diego area can get help from the Allen Barron and the Law Firm of Janathan L. Allen, APC. Our firm represents individuals and business facing an IRS audit and all types of tax issues including audits, collections, compliance and tax planning.

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For more information or to discuss your tax, legal and accounting needs contact Allen Barron or call 866-631-3470 for a free and confidential initial consultation. Learn about the importance of integrated business strategy and coordination across legal, tax and accounting systems.

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