Have you received a letter from the IRS about an audit? It may seem simple enough to deal with an IRS audit when you are told you are being audited but it can be a little trickier than you think. It’s a good idea to seek out professional assistance as soon as possible after you receive an audit letter. Below are a few things to consider if you're facing an IRS audit.
- A seasoned IRS agent knows all the rules and they have seen your situation many times before and they are not obligated to teach you the rules. Having a professional in your corner that understands the tax codes and knows your rights can help you correctly correspond with the IRS.
- Insufficient records can be costly. If you are selected for an audit the IRS will make a written request for specific documents they would like to see. This may include things like bills, documents, receipts, loan agreements, etc. It can be a little risky if you’re missing something from their list. Although you may be able to recreate some of your records, you may need a good explanation in order to avoid any additional taxes and a possible 20% negligence penalty.
- If you give too much information it could also be a risk for an audit. Though most IRS audits are limited in scope, the agent has authority to increase the scope depending on what they find in the original analysis. In other words, if they find a document or you say something suspicious, the agent can add additional areas to the audit. You must be prepared with the proper support and have clear answers to the questions to limit any further audit risk.
- If you miss the audit deadline it could lead to big trouble. Your audit request letter will include a response deadline, usually 30 days. If you don’t respond by the deadline, the IRS will change your tax return using their interpretation of any findings. Generally, this means assessing new taxes, interest, and penalties. So if you want your views to be heard, seek professional help right away to assist you in preparation of a plan and to manage the IRS deadlines.
- Tax audits are never fun for anyone. Seeking professional assistance will help devise a plan and ensure the best outcome possible. It will also give you peace of mind knowing you have the help of a professional with your best interest in mind.
At Summit CPA we offer multiple resources to assist you with all of your tax and financial planning needs. Contact our office at 866-497-9761 to schedule an appointment with our advisors.