No one wants to open their mailbox and discover an envelope from the Internal Revenue Service. Tax payers know that such an ominous package usually means that they have been selected for an audit. The prospect of undergoing an audit can be incredibly nerve wrecking, even for individuals who are completely confident in their ability to file everything correctly.
Perhaps some of the many reasons audits seem so intimidating are the unknowns inherent in the process. How long with the audit take? What if it's impossible to track down all the proper documentation? What action can I take if I don't agree with the audit's findings? CNN recently published a helpful article which addresses some of these fears through a first-hand account from an IRS tax audit survivor.
The article's author is a New York woman who received an audit notice for her husband's business. Despite her initial dismay and panic upon realizing that she would have to answer for over $20,000 dollars in business expenses, the author discovers several things about the audit process which could help others prepare for a similar situation. Some of the discoveries include:
- The individual who files the tax form will be the one called to answer for an audit. Even though the audit received by this New York woman was targeted at her soon-to-be ex-husband's business, since she was the one who filed the taxes during their marriage, she received the audit.
- Most audits will not require the tax payer to defend their entire return. The author relates how her audit form detailed exactly which business expenses were being questioned. This prevented her from having to track down supporting documents for every expense her husband claimed.
- You have the right to appeal an auditor's decision. Although this author chose to simply pay the bill presented at the end of her audit session, her auditor reminded her that she could appeal the amount if she disagreed with her decision.
This author's experience is a testimony to how confusing, frightening, and nuanced an audit experience can be. Although she decided to go through the process alone, it's possible she could have achieved better results by consulting with a tax attorney.
Source: CNN Money "I survived an IRS tax audit." Amy Haimerl, 23 February 2011.