Facing an audit from the IRS, simply put, can be terrifying. Whether the IRS notifies you of an upcoming audit of your personal finances or your business, you may worry what will come from an audit conducted by mail or worse, in person.
Fortunately, many taxpayers across California and the U.S. will not have to endure an IRS audit over their lifetimes. However, when you do face an audit, it is necessary to be thoroughly prepared. Accounting Today put together a list of “Ten Commandments” of what to do and what not to do when facing an audit:
- Do not: ignore the auditor. While ignoring an audit may be tempting, it can make matters even worse. Respond promptly and cooperate with the IRS.
- Do not: lie to the auditor. Lying to the IRS auditor is a crime and can only put you in a worse position. Tell the truth and consult with an attorney if necessary.
- Do: exercise your right to appeal. While it can feel like the auditor has the ultimate say, you do have the right to appeal to the IRS if you disagree.
- Do: file all required returns. The IRS requires all returns filed prior to an audit. Make sure you are up to date to avoid starting out on a bad note with the auditor.
- Do: prepare for the audit. Audits can be long, detailed and intimidating. Prepare yourself to answer all questions and avoid even further questioning.
- Do: speak with the manager. If you disagree with your auditor, you have the option to speak with their manager to address your concerns.
- Do: get everything in writing. As the IRS often requires everything to be in writing, you can request this too to avoid miscommunications or confusion.
- Do not: miss deadlines. Missing appointments or deadlines can be detrimental to your case. Keep organized, especially early on, to avoid consequences.
- Do not: automatically comply with penalties. Your penalties may seem unfair to your case. If you disagree, you may contest these but be prepared to do so.
- Do not: speak to the IRS alone. Going through an audit is challenging and intricate. A tax attorney can help you navigate a complicated process.
Ultimately, being prepared, understanding your rights and seeking help if you need it can all help to ensure a smooth audit process.