6 Tips to Prepare for an IRS Audit
An IRS audit is not something that most people look forward to. Although it may fill you with fear or dread to see a notice from the government, it doesn’t mean that you have done anything wrong. Let’s take a look at some ways that you can adequately prepare for the audit process.
Stall As Much as Possible
One of the best things that you can do for yourself is to delay the audit for as long as possible. The longer the audit drags on, the more likely you are to obtain a favorable outcome. At the very least, use this time to prepare your records or to prepare a compromise if you don’t think the facts are on your side. It is worth noting that you can ask for more time for almost any reason, and your request for a delay will usually be granted.
Make Sure That You Have All of Your Records
It is critical that you have as much information available to defend yourself against the audit as possible. Relevant information could include payroll records, receipts or anything else that can dispute that you owe money to the IRS. In some cases, it may be possible to ask for copies of records such as a Form 1099 to help defend yourself against the taxing authority.
Keep the Scope of the Audit Limited
The IRS is only entitled to records that it asks for as part of its audit. Therefore, you shouldn’t volunteer information that could increase the scope of its investigation. For example, you shouldn’t mention that you didn’t file a tax return in 2016 if the government never asked about it. If you think that you are going to say or do something to jeopardize your position, it may be a good idea to have a tax attorney negotiate with the government on your behalf.
Talk With An Attorney
Even if you don’t think that you need an attorney to help with your audit, it can’t hurt to have a consultation. In some cases, a legal representative will give you a few minutes of his or her time for free. It may also be possible to get free or discounted legal advice online. However, if you go that route, it is important to know that anything your told is likely to be general in nature.
Avoid a Field Audit
One of the worst things that can happen is for the IRS to visit your home or place of work. This is because they may see or hear things that could widen the scope of the audit or otherwise strengthen their current case. Ideally, you will meet with an IRS agent at a field office as you may fare better in a neutral setting. In some cases, the government may agree to meet at your attorney’s office if a meeting can be arranged in a timely manner.
Be Calm and Polite
You will do yourself no favors by being angry or belligerent when talking with an IRS agent. This will likely annoy or upset the person who has the power to levy significant fines and other financial penalties. Depending on the facts of the case, he or she could have the power to press criminal charges or seize assets.
If you are calm, polite and agreeable, it is more likely that the agent in charge of your audit will show leniency. Staying in control of your emotions can also help you do a better job of answering questions or rebutting IRS assertions.
The last thing that you want to contend with is an audit from the IRS. However, how you prepare for this event may go a long way toward determining its outcome. By staying calm and being reasonable in your expectations, you can come out of an audit without a lot of financial damage. It may also be possible to keep your personal and professional reputations intact as well.
