How to Fight a Business Office Audit

Sometimes the IRS will call for an office audit of your business for no apparent reason. That's why it's so important to keep your records in good order, and always be ready to document any and all deductions you declare on your tax returns. There are times, however, when you'll find some of the auditor's finding erroneous or inaccurate. If that happens, you have the right to fight the office audit and have the findings amended.

Difficulty: Easy

Instructions

Things You'll Need:

• Bank statements
• Financial records
• Receipts

1. Tell the IRS auditor that you wish to tape record all of the office audit proceedings. This is one of your rights as an auditee, but you must inform the IRS at least 10 days prior to the audit that you wish to record it. The importance of this recording is that you can use it as evidence should you be poorly advised or given erroneous information.

2. Appeal to the IRS auditor's supervisor. Supervisors have the authority to overrule the findings of subordinates provided their findings indicate mistakes were made. In addition, supervisors have the authority to adjust payment schedules if you are found responsible for back taxes.

3. Request an appeal. Appealing an audit's finding involves presenting your case in an appeal conference or hearing. An appeal gives you the chance to show where you feel the auditor has incorrectly interpreted the law or issued findings in spite of evidence that helps prove your case.

4. Save all of your financial records, even the most mundane receipts you receive. This is especially important if you're planning on placing a lot of deductions on your tax return. Also be aware that the more deductions you take, the more likely you'll face an audit.

5. Visit the IRS website to find resources related to appeals and tax law (see Resources below). The IRS website also contains links to tax advocates who can help you in your efforts to appeal your case.

Tips & Warnings

• Hire an accountant or a tax lawyer to represent you in your dealings with the IRS. Hiring someone else to represent you prevents you from being directly intimidated by the IRS. It also gives you a resource far more knowledgeable about taxes and IRS laws.
• Be aware that it can take a long time to fight an office audit. The IRS isn't in a rush to overturn or overrule its officers' findings. The IRS is likely dealing with a high number of other complaints as well. Expect the process to take, at a bare minimum, 90 days. Most people who choose to fight a business office audit end up spending up to a year in proceedings.

Resources

• Forms, files and business resources from the IRS.