How to Handle an IRS Audit

If you pick up your mail to find an envelope from the IRS and it’s not tax time, take a deep breath. It might be a notice that you’re being audited by the IRS. Here are a few tips on how to handle an IRS audit.

Difficulty: Moderately Challenging

Instructions

1. Determine if the audit is worth fighting. If you don’t have the stamina to go through fighting an IRS audit, and if the amount they’re looking for is minimal, maybe it’s best to just pay the difference and call it a day. Not every IRS audit is worth fighting.

2. Respond promptly. Prompt response to the IRS is necessary whether or not you decide to fight the audit.

3. Talk to your CPA and hire a tax attorney. Since the services of a CPA and tax attorney are not cheap, make sure the amount in dispute warrants the heavy guns. Low income tax filers who owe smaller amounts should visit the IRS website and read publication 4134 (Low Income Taxpayer Clinic List). Publication 4134 outlines guidelines for low income taxpayers to receive representation when dealing with IRS audits.

4. Submit all tax documentation and correspondence to your representative. The IRS audit process can be lengthy. When you receive letters from the IRS regarding the audit, forward them all to your legal representative. Let them earn their fee.

Tips & Warnings

• The IRS has three years from the time you file your taxes to audit them. Don’t throw your tax documentation away too early.

Resources

• IRS Publication 4143