The IRS plays a part in giving out a notice of audit to individuals and organizations. There are a few things that you must remember if you happen to be one of these lucky people, so your experience becomes as hassle-free as possible. Merely ignoring this request for documentation is the last thing that you want to do. As early as now, even if you do not have what they request from you, you can avoid unnecessary expense and further problems when you contact the examiner ahead of time. You may call them to ask for extra time so you can comply with their requirements.
Most people are struck with fear when they hear from the IRS. You should not feel this way. Just because you have been chosen for an audit does not necessarily mean that you have done something wrong. Tax returns are selected in many ways to include document matching, random computer selection, or related examinations. The IRS guarantees to protect taxpayers by providing specific rights associated with audits. These rights include the right to courteous and professional treatment by the IRS employees; the right to know why they are asking for information, how they will use it, about what will happen if the information being requested is not given; the right to confidentiality and privacy about tax matters; the right that you can be able to appeal disagreements before the courts and within the IRS; and the right to representation either by an authorized representative or oneself. If you think that your rights are violated as a taxpayer, you can get in touch with taxpayer advocacy for assistance.
The possibility of an audit by the IRS is one of the main reasons why you should keep records in support of your credits as well as your deductions for three years from your return dates. One of the challenging parts about dealing with the whole process of an audit is gathering the necessary documents to substantiate your position. You should keep in mind that audits are carried out to document with proof what is on your return. If you cannot present the IRS with any records, you will be facing unwarranted and adverse outcomes that can cost you a great deal of money.
An audit can be done in various ways. It may be done by phone or in person at your home or office, local IRS office, or your tax professional’s office. What applies to you depends on your situation. The IRS often sends you an audit notification by mail or phone to give you enough time to prepare the necessary documents. If the audit proves changes done on your returns, you should thoroughly explain the said changes. In turn, the IRS will give you instructions if you decide to appeal to their findings. On the other hand, if you do agree with the findings of the IRS audit, you will be requested to sign as well the examination report form.
If after the audit you discover that you have a tax liability and cannot pay it in full, the IRS will give you different payment options so they can assist you in your financial hardships. Again, you should never fear the IRS but respect them. Usually, adverse outcomes result from ignoring the notices or failing to seek help when you require it.