How to Handle an IRS Field Audit
April 15 has gone and gone, your tax return was mailed in on time and you're confident it is smooth sailing from here to the next income tax period. Then the letter comes in the mail bearing the Internal Revenue Service's logo and return address. Your pulse rises and then you almost have a heart attack when you read the words "field audit" in the letter. During a field audit, an IRS agent will visit your business and inspect your tax documents to ensure compliance. If you receive this notice, start getting busy.
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Instructions
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Contact the IRS and schedule a meeting time. The letter will inform you you may schedule the meeting "at your convenience." According to Crown Financial Ministries, schedule the meeting within the next 60 to 90 days.
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Ask the IRS why you are being audited. You have the right to know, and the answer will help you prepare better. Based on the agent's answer, begin to gather the relevant documentation.
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Create a file containing the tax information that relates to the reason you are being audited. Keep this information in a separate file from other information about your business. You do not want to hide anything from the IRS, but you do not have to give the IRS free reign to inspect every record in your business.
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Arrange for the meeting to be held at someplace other than your business. A neutral conference room, such as often available at the local courthouse, is a possibility. Contact the IRS to schedule this change at least a week before the agent is set to meet with you.
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Provide the IRS with only the information asked for. Bring the file containing the tax records you gathered to the meeting. As the agent asks questions, provide documentation to him at each question. This helps you control the flow of information and keeps the investigation focused on the original issue rather than creating new issues.
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Tips & Warnings
Stay calm and comply with the requests as professionally and politely as possible. Just because this is a field audit does not necessarily mean you did anything wrong.
