Terry Herrell, EA
Terry Herrell, EA - Accredited Financial Services
2644 Appian Way, Suite 203 Pinole, CA 94564
Phone: (510) 243-1535 - Fax: (510) 280-7449
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How to Survive an IRS Audit

If you receive a letter of notification from the IRS stating that you are being audited, knowing what to do may very well be the difference in whether or not you survive it.

First and foremost my advise is the you immediately contact your tax advisor.
I am a firm believer that no one should attend an audit without the back up of a professional, if they go at all. In most cases it can be to your benefit to have your tax person represent you at the audit.

All that having been said the following points should to be addressed.

Donít ignore the notice.
Usually, you will be allowed thirty (30) days to respond to the audit notice. If you donít respond the IRS has the right to automatically adjust your tax liability Ė as a rule not in your favor.
Read the Audit Notice carefully.
The notice will tell you which year and what items in that return are being questioned as well as what they would like you to bring to the audit. Often just one or two items are being questions and it becomes a simple matter to collect the necessary records to substantiate your return.
Bring only what you need to the Audit.
That is only documents that deal with the scope of the audit. If you have other documents you will run the risk of having the audit expanded to other areas of your tax return. As a rule auditors wonít go beyond what has been requested. However I have seen it happen.
Be prepared.
Review your tax return. Organize your records. Run an adding machine tap for checks and invoices.
Donít (Never, Never, Never) argue with an unreasonable auditor.
If youíre unlucky enough to draw a rude or unreasonable auditor, or if you and the auditor canít reach an agreement request to speak with a supervisor. Then calmly explain the situation. (A word of Caution here Ė a supervisor, not the auditor, has the authority to expand the scope of the audit beyond what was initially in the audit notice.)
Tell the Truth.
Deliberately lying during an audit is a criminal offence. If you donít know the answer to a question just say you donít know. If you are asked a question that you do not want to deal with or canít handle, simply end the interview at that point.
Donít give originals of documents to the IRS.
The IRS has a reputation for misplacing paperwork. Bring only photocopies to an audit.
Stick to the subject.
Donít volunteer any information that hasnít been requested or the auditor may turn his attention to other aspect of your tax return.
Know your rights.
In general, itís best to settle an assessment at the audit. You are not required to accept the auditorís decision. If you think that the auditorís decision is wrong you can request that the matter be sent up to the Appeals Division. If that decision is not satisfactory the next step will be tax court.
Donít take it Personally.
Stay calm, and as distant as possible. Remember to the auditor this is just business. Itís their job, nothing personal.

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Site MenuHome · Services · Tax Tips · Contact Us · About Us · Resources · News · FAQ
Terry Herrell, EA - Accredited Financial Services
2644 Appian Way, Suite 203 Pinole, CA 94564
Phone: (510) 243-1535 - Fax: (510) 280-7449