Every year, tens of millions of taxpayers submit their returns to the Internal Revenue Service. Whether relying on an electronic submission or the traditional process of mailing a return, taxpayers may feel a hint of nervousness. No one wants an audit letter sent to their Texas address, but IRS examinations happen. Preparing for an audit could help taxpayers deal with the situation effectively.
Getting ready to address an IRS audit
Refuting an audit involves gathering the evidence necessary for doing so. For example, did the IRS challenge charitable deductions? Presenting proof that the taxpayer made the donations and establishing the charity’s legitimacy could help.
Hopefully, the taxpayer kept good records. Poor record-keeping may lead to more troubles with the tax authorities as not keeping accurate records might be a violation of the law.
Professionalism counts when providing the IRS with the documents it requests. Going to a local office and losing one’s temper with an IRS employee could turn a manageable situation into a legal disaster.
Concerns about IRS audits
Tax audits might result in someone facing an assessment of additional taxes owed. Worse, the audit might lead to additional penalties or a referral for criminal charges.
Not every situation could lead to terrible consequences, though. Someone who claims business deductions for personal expenses may get into trouble, but a person who made an honest mistake over a relatively small amount of money might only see a slightly increased assessment.
Directly contacting the IRS is not recommended. A taxpayer may say the wrong thing by mistake or reveal information that the tax agency didn’t ask for or doesn’t need to learn. Working with a tax attorney might help a client avoid making a challenging situation worse.
It’s important to be mindful that a disappointing decision from an IRS auditor might not mean the end of things. Taking the matter to tax court could potentially reverse an improper audit assessment.