IRS Tax Strategy: How to Survive an IRS Audit

The last thing any taxpayer wants to experience is an IRS audit. But it happens to millions of unfortunate taxpayers every year. And as you know, if you’ve been paying attention to these blog entries and articles, small business owners are somewhat more likely to be audited than individual taxpayers.

So what should you do if you receive a notification from the IRS that you’re being audited?

First and foremost – get professional help! It’s a bad idea to face the IRS on your own. A recent Huffington Post article offers a number of additional suggestions:

  • Respond to the IRS within the stated deadline — usually 30 days.
  • Gather and organize receipts pertinent to the issues they’ve identified. This could include statements for credit card, bank, retirement or investment accounts, cancelled checks, W-2 and 1099 forms, cost-basis for property and taxable investments, etc.
  • If you won’t have all requested information ready in time for the audit, contact your auditor to discuss whether it can proceed anyway, or if they’ll agree to postpone it.
  • Bring or send only documentation requested in the initial notice. If you’re meeting for an in-person audit, keep your answers brief and don’t voluntarily provide information that could launch a fishing expedition.
  • If the examiner questions you on an item not mentioned in the initial notice, you’re allowed to ask for additional time to fulfill additional requests.
  • Seek representation, especially if you don’t understand the process or if it’s a field or office audit.
  • Never give original receipts to the IRS agent — they are not responsible for lost paperwork.
  • Always be polite. Acting belligerent or evasive can only hurt your cause.

These tips are helpful, and sticking to them will help avoid further trouble with the IRS. But we can’t stress enough how important it is to be represented by an attorney who focuses exclusively on IRS or tax matters when you face the agency. IRS agents rely on intimidation and other threatening tactics in order to get what they want. And unfortunately, most taxpayers simply aren’t familiar enough with the law to know their own rights and properly defend themselves against the IRS. That’s why you are always better off having an experienced lawyer on your team!

Contact us today if you’d like to learn more.