Need tax audit help? We can help.
April 17, 2019
Many of our clients from the Denver, Aurora, Littleton and surrounding areas have a fear or uncertainty of being audited. But getting an audit notice from the Internal Revenue Service (IRS) doesn’t have to be overwhelming. We are here to give you the tax audit help you need:
Why have I been selected for a tax audit?
The first thing to remember is that just because you have been audited by the IRS does not mean there is a mistake on your taxes, there are several reasons you may have been audited including:
· Failure to report all income: Failure to report any income from side jobs or major gifts
· Math errors: Accounting errors such as the miscalculation of total income
· Deducting too many work expenses: Expenses deducted must be ordinary and necessary for your scope of work
· Using round numbers: Typically numbers from your tax forms are not whole, round numbers – using whole round numbers on your tax forms could trigger an audit
· Too many charitable deductions: Only claim what charitable deductions you have actually made if you are claiming a large amount in comparison to your salary it is likely to raise a few concerns with the IRS
While these are a few of the most common, they do not represent all reasons that the IRS might audit you. Professionally filed tax returns are also not immune to tax audits, so keep that in mind if you have been audited after using a tax preparation service.
How will I know?
The IRS will only notify you via mail if you’ve been selected for an audit. Audits are not initiated through telephone calls. If you receive a call, text, or email from anyone claiming to be the IRS demanding money, it is a scam and you should avoid providing any personal information. Typically, you have thirty days to respond to an IRS audit. It’s important to not ignore the IRS. If you ignore their request for an audit, the IRS is within their rights to immediately adjust tax liability and deliver you with a tax bill.
What do I need to have ready?
When notified of an audit, the IRS will also provide you with a written request for whatever documentation they might need. However, the documents that might be requested include:
· Receipts
· Bills
· Cancelled checks
· Employment documents
· Legal papers
· Loan agreements
It is helpful that whatever documents you send, or take, to the IRS are neatly organized chronologically. Remember, the law requires that all documents used for tax returns should be kept for three years after the filing of your tax return so you should have the documentation requested.
What if I don’t have my documentation?
Expenses such as medical bills can be recreated through bank statements, or you can reach out to your doctor’s office or pharmacy to get the necessary receipts. Unfortunately, expenses such as charitable contributions, travel/entertainment expenses, and even mileage are difficult to recreate. If you are unable to provide proof of this documentation, the IRS can disallow you from claiming it on your taxes. If you are unsure of how to provide or find proper documentation, reach out to your tax professional.
What can I expect?
You can visit the IRS yourself, or have a tax professional go in your place. Your tax professional might also agree to go with you as well. It’s important to do whatever you’re most comfortable with, but if you do go to the IRS they might ask you questions to put you on the spot. The IRS is always seeking additional information from you – each question they ask has a purpose.
No matter who goes, make copies of all documentation that is requested. Never provide the original copy of your documentation, and only provide the documentation that is requested by the IRS. When answering questions, always be honest and upfront with the IRS – but keep it concise.
Always be friendly, and keep your calm with the IRS representative. The IRS representative has to deal with hundreds of tax issues every year – staying calm and respectful will go a long way with your representative.
How long will it take?
Auditing duration can vary in time based on a number of things, including the availability of requested information, complexity of the issues, and what type of audit it is.
What if I have a tough auditor?
If you have found yourself with a tough auditor – it is okay. You have several options, including delaying the audit or requesting a new auditor. If you are in the middle of your audit and realize you need a break, you are within your rights to request a recess and resume at another time. If you are interested in speaking with a new auditor, you will need to request to speak with an IRS manager. You are always welcome to stand up to your auditor, but be polite when doing so. You are also within your rights to record the IRS audit, as long as your provide notice to the IRS ten days prior to your appointment with the auditor.
What if I disagree?
If you disagree with audit findings you are allowed to file an appeal, participate in mediation, or conference with an IRS manager. When going through any of the aforementioned processes, it can delay your refund or tax resolution. If you agree with the findings of the IRS, you might be asked to sign an examination report or similar form.
What’s next?
After finalizing your taxes - you’ll either owe money to the IRS, will be given a refund, or will break even. If you owe money to the IRS, you have several options including installment plans or extensions. It’s important to remember that no matter what you choose, failure to pay the IRS can result in seizing property/assets and garnishing wages.
Contact our Advanced Tax Solutions team today to learn how you can successfully navigate the tax auditing process. We are always here to help with any of your questions and requests.
Go Back Why have I been selected for a tax audit?
The first thing to remember is that just because you have been audited by the IRS does not mean there is a mistake on your taxes, there are several reasons you may have been audited including:
· Failure to report all income: Failure to report any income from side jobs or major gifts
· Math errors: Accounting errors such as the miscalculation of total income
· Deducting too many work expenses: Expenses deducted must be ordinary and necessary for your scope of work
· Using round numbers: Typically numbers from your tax forms are not whole, round numbers – using whole round numbers on your tax forms could trigger an audit
· Too many charitable deductions: Only claim what charitable deductions you have actually made if you are claiming a large amount in comparison to your salary it is likely to raise a few concerns with the IRS
While these are a few of the most common, they do not represent all reasons that the IRS might audit you. Professionally filed tax returns are also not immune to tax audits, so keep that in mind if you have been audited after using a tax preparation service.
How will I know?
The IRS will only notify you via mail if you’ve been selected for an audit. Audits are not initiated through telephone calls. If you receive a call, text, or email from anyone claiming to be the IRS demanding money, it is a scam and you should avoid providing any personal information. Typically, you have thirty days to respond to an IRS audit. It’s important to not ignore the IRS. If you ignore their request for an audit, the IRS is within their rights to immediately adjust tax liability and deliver you with a tax bill.
What do I need to have ready?
When notified of an audit, the IRS will also provide you with a written request for whatever documentation they might need. However, the documents that might be requested include:
· Receipts
· Bills
· Cancelled checks
· Employment documents
· Legal papers
· Loan agreements
It is helpful that whatever documents you send, or take, to the IRS are neatly organized chronologically. Remember, the law requires that all documents used for tax returns should be kept for three years after the filing of your tax return so you should have the documentation requested.
What if I don’t have my documentation?
Expenses such as medical bills can be recreated through bank statements, or you can reach out to your doctor’s office or pharmacy to get the necessary receipts. Unfortunately, expenses such as charitable contributions, travel/entertainment expenses, and even mileage are difficult to recreate. If you are unable to provide proof of this documentation, the IRS can disallow you from claiming it on your taxes. If you are unsure of how to provide or find proper documentation, reach out to your tax professional.
What can I expect?
You can visit the IRS yourself, or have a tax professional go in your place. Your tax professional might also agree to go with you as well. It’s important to do whatever you’re most comfortable with, but if you do go to the IRS they might ask you questions to put you on the spot. The IRS is always seeking additional information from you – each question they ask has a purpose.
No matter who goes, make copies of all documentation that is requested. Never provide the original copy of your documentation, and only provide the documentation that is requested by the IRS. When answering questions, always be honest and upfront with the IRS – but keep it concise.
Always be friendly, and keep your calm with the IRS representative. The IRS representative has to deal with hundreds of tax issues every year – staying calm and respectful will go a long way with your representative.
How long will it take?
Auditing duration can vary in time based on a number of things, including the availability of requested information, complexity of the issues, and what type of audit it is.
What if I have a tough auditor?
If you have found yourself with a tough auditor – it is okay. You have several options, including delaying the audit or requesting a new auditor. If you are in the middle of your audit and realize you need a break, you are within your rights to request a recess and resume at another time. If you are interested in speaking with a new auditor, you will need to request to speak with an IRS manager. You are always welcome to stand up to your auditor, but be polite when doing so. You are also within your rights to record the IRS audit, as long as your provide notice to the IRS ten days prior to your appointment with the auditor.
What if I disagree?
If you disagree with audit findings you are allowed to file an appeal, participate in mediation, or conference with an IRS manager. When going through any of the aforementioned processes, it can delay your refund or tax resolution. If you agree with the findings of the IRS, you might be asked to sign an examination report or similar form.
What’s next?
After finalizing your taxes - you’ll either owe money to the IRS, will be given a refund, or will break even. If you owe money to the IRS, you have several options including installment plans or extensions. It’s important to remember that no matter what you choose, failure to pay the IRS can result in seizing property/assets and garnishing wages.
Contact our Advanced Tax Solutions team today to learn how you can successfully navigate the tax auditing process. We are always here to help with any of your questions and requests.
