John P. Willis | IRS All Star | Tax Resolution Attorney
Tax season is finally behind us – and if you are like many Americans, particularly business owners and high-income individuals, that means a big sigh of relief. Hopefully it also meant a sizeable refund check!
But now that the returns have been filed, there is another concern that often weighs heavily on the minds of taxpayers—the fear of being selected for an IRS audit.
And while it is true that facing an IRS audit can be stressful and time-consuming, there is no reason to panic. In fact, if you’re prepared and if you have “played by the rules”, an IRS audit can be quite painless. Below are three tips to help you prepare for an audit should you be selected to do so, courtesy of a recent CNN.com article:
Know what to expect.
Envisioning a visit from a suit-clad IRS agent with a briefcase? That’s not usually how an audit plays out. The vast majority, or 76%, are correspondence audits, meaning the IRS requests information by mail instead of questioning a taxpayer in person.
These tend to focus on specific items on a return — like itemized deductions for medical expenses — and simply ask for documentation, said John Lieberman, CPA at Perelson Weiner LLP. In-person field audits are broader inquiries about a tax return and often involve verifying income, he said.
In either case, you’ll likely receive a notification by mail explaining which parts of your return the IRS has questions about.
Don’t ignore the letter.
Shoving the letter you get from the IRS in a drawer and pretending it’s not there won’t make it go away. You’re usually given 30 days to respond, so make sure to….