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What to Expect in an IRS Audit
Many people are filled with an increased sense of dread when
they learn that they are to be audited by the Internal Revenue
Service. However, it is important to remember that the more
prepared you are, the more in control you are. Preparation can
help lead to decreased anxiety about the events that are
unfolding. IRS Audits are sometimes necessary, and do not need
to be all together unpleasant. Understanding what will occur
can help you to be ready for the different questions that might
be posed and the different options that you have during the
course of the audit. It is important to make sure that you are
honest when you are filing your taxes and that you will be able
to support any claims that you make with physical proof that
you can show auditors, if you do in fact need to be
audited.
First, a person will receive a notice that they are going to be
audited. An audit is not an accusation against the tax payer;
it is just a check up to make sure that everything is accurate.
Cash businesses are easy targets for the IRS, as are businesses
like lawyers and physicians that do their own bookkeeping. It
is important not to panic when this notice is received.
Sometimes there are face-to-face tax audits, but actually one
third of the audits that are performed by the IRS,
approximately, are done through letters. The IRS simply writes
a letter to the person or business asking for explanations of
certain things that appeared in the person's tax filing. Once
an acceptable letter is submitted to the IRS explaining the
issues, the audit is typically concluded. Of course, these are
not the audits that most people hear about and are fearful of.
Most people are worried about the sit down audits.
The notice will typically tell you why you are being audited
and this will enlighten you as to what materials you will need
to bring with you. It is very important to stay organized with
your audit materials and have copies handy for the audit
meeting. Some people have also found it helpful to bring with
them spreadsheets that help to illustrate how the tax figures
in question were calculated. It is important in many cases not
to volunteer information to the IRS. Remain courteous, but it
is not necessary to provide any information that was not
specifically requested. Sometimes tax auditors are only
concerned with a portion of the tax filing. If this is the
case, you only need to bring your tax records that are in
relation to the portion that is being reviewed with you to the
meeting. If it is a company that is being audited, then it is
important that the owner sit down and mentally review, if not
write down, any different problems that their company might
have come across during the tax year which is being looked
into.
It is also important to remember that you have a number of
different tax rights. This can help you when you are faced with
an audit. Remember that you can have someone with you and
represent you at your tax audit. This can be a lawyer or an
accountant, for example. If you notify the IRS within ten days
of the audit, you can also tape record the audit session. It is
also possible to appeal in a tax collections case. This can be
done for reasons involving tax liens, levies and seizures. In
some cases, it is not even necessary that you be there. By
giving power of attorney to a representative such as an
accountant or a lawyer, they can act in your place and it is
not even necessary for you to be there. The only instance this
does not apply to is when there is a specific summons for you,
from the IRS.
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