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Guiding You Through The Legal Process

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Tips on how to handle an IRS audit

On Behalf of | Mar 25, 2016 | Tax Audits

Georgia residents who have received an audit letter from the Internal Revenue Service may be wondering what it means. While the letter may not indicate a person is guilty of tax fraud, it also should not be ignored.

In most cases, an audit letter from the IRS means that tax officials are requesting an examination of a taxpayer’s last three years of tax records. Sometimes, they may request to see more records but usually not more than six years. In any case, taxpayers who receive any kind of correspondence from the IRS should not disregard it because it could possibly result in huge interest charges and penalties that could amount to more than the taxpayer’s original tax liability. Then, people who fail to pay overdue taxes could be hit with a tax lien, which will hurt their credit, while paying a tax debt with a personal loan or credit card will be reported on a person’s credit report.

People can prepare for the audit by gathering and organizing their tax returns and W-2s. Those who included a home office deduction in their return may also benefit by straightening up their home because IRS agents sometimes visit the taxpayer’s house during the audit to examine the office space.

It is also important for taxpayers to be courteous and mannerly to auditors. Moreover, taxpayers who cannot make the audit for some reason should communicate with the IRS, explain their circumstances and arrange for another date.

A person who is being audited may want to have the representation of a tax attorney at every stage of the process. An attorney can often address any issues that may come up during the meeting, and the taxpayer will not have to be afraid of saying the wrong things to the agent.

Source: US News, “The IRS Audit Survival Guide”, Geoff Williams, March 15, 2016