How to Prepare for an IRS Audit
The words "tax audit" strike fear and dread in most taxpayers, conjuring up images of dark-suited IRS agents scrutinizing every receipt, every worksheet and every line of a tax return, all while adding up additional taxes and penalties. But in some cases, IRS audits are merely letters requesting additional documents or explanations of specific items on an individual or corporate income-tax return. Other audits are more comprehensive, involving face-to-face meetings with an IRS representative who will audit your entire tax return. Whatever the case, some advance preparation and professional assistance can make an audit less intimidating.
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Instructions
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Preparing to Face the Tax Man
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Examine the audit notification letter closely to determine the nature and extent of the audit. The IRS may want to audit your entire tax return or only a portion of it. In some cases, it may question only a deduction or tax credit that you claimed.
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Contact your tax professional for assistance. He can advise you during the audit process and help you prepare. If you prepared the tax return yourself, contact a Certified Public Accountant (CPA) or an attorney to represent you. You have a legal right to representation if your tax return is audited. The U.S. Tax Code is lengthy and complex, and these people are knowledgeable in tax law. Do not try to take on the IRS by yourself, as the auditor will understand tax laws better than you do.
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Gather the necessary financial documents and records. Organize these documents and make copies, so that you will have the evidence to support your position in the matter under audit. Gather only those documents that relate to the matters referenced in the IRS audit notification. Make sure your paperwork includes the relevant worksheets that show how you calculated the matters in question.
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Send copies of requested documents and worksheets if the audit matter requires only written correspondence. Do not send originals, as they could get lost in the mail.
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Be cordial at any face-to-face meetings with IRS representatives, but don't volunteer any information that was not requested. The IRS auditor is not your friend.
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Tips & Warnings
Do not ignore the audit notification. In some cases, a written explanation and some supporting documents can resolve the matter quickly.
