Amongst several factors that strike fear deep in the hearts of grown American men and women is receiving the IRS audit summons. Even if you have submitted your returns honestly and accurately, it is possible that your accounts may be subjected to an IRS audit. Though you are entitled to know why you are being audited, once you have received the audit communications from the IRS, they just can’t be wished away. You just have to buck up and handle the IRS audit to the satisfaction of the IRS and get yourself off the hook.
Why You Were Selected for an IRS Audit
Actually, around 2% of the total tax returns filed are picked up by the IRS for an audit. However you have greater chance of attracting an IRS audit on your personal tax returns if
i. the returns you filed have too many errors and don’t make sense
ii. you ‘forgot’ to mention income from interest and dividends
iii. you showed exceptionally high or low income
In case of business taxes, small business and home-business owners as a category are at a higher risk for IRS audit requests and the reasons may vary from ‘disputable’ deductions, excessive deductions in any one area, having a family member on the payroll, etc.
In some cases, your account may have been selected at random to check taxpayer compliance.
How to Handle an IRS Audit
First calm down and read the IRS communication clearly. The IRS rarely audits the entire return, but mostly focuses on certain portions of it. The IRS may request proof on certain items that will be ticked on the IRS form. So the first step is to make sure that you have these documents ready. In case it is just a mail-in IRS audit, you can send the required details (by certified mail of course, to ensure proof of receipt) and there the matter ends, if the IRS is suitably satisfied.
In Person Audit
The IRS may require you to meet their local IRS agent to ‘clarify’ certain aspects. These is a slightly more complicated IRS audit scenario, but remember, by being nervous during the audit, you will only make it worse still. Unintentionally, you may give the IRS agent reason to believe that you are hiding something, which may prompt an even more in-depth scrutiny.
And if you decide to represent yourself at the IRS audit, be sure to carry all documentary proof as required. Read through all aspects of the return thoroughly so as to be prepared to answer the agent’s questions. Be nice, but professional and to the point. Don’t try to be overfriendly with the agent, as it will get you nowhere and may in fact work detrimentally.
Professional Representation for IRS Audit
If you are unsure of your ability to handle the IRS audit, get professional help. Professional enrolled agents, CPAs, or tax attorneys will represent you at the IRS audit so you don’t have to be present personally. This takes a great load off your shoulders. Professional representatives, enrolled agents, will help you put together all the necessary documentation in the appropriate format. Even if certain proofs are missing or lost, they would know alternative documents that could be used as proof or they would be able to convince the IRS agent of the validity of the deduction even in the absence of supporting documentation. The primary aim of the enrolled agent in the IRS audit is to limit your exposure and minimize the damage. This means only precise and to the point information is given to the IRS to limit exposure of your vulnerabilities that may prompt another IRS audit.
If you are looking for the best professional representation for your IRS audit, visit www.mytaxrelief.com. Mike Habib, an IRS licensed enrolled agent and founder of the company has vast experience in dealing with the IRS. Mike specifically works to ensure that your IRS audit proceeds smoothly and also helps in negotiating your overall tax debt with the IRS.