Did you receive notification of an IRS audit? Whatever you think, don’t ignore it and don’t panic! While this may not be a “fun” time in your life, it doesn’t necessarily have to be torture. We’ve put together some information and tips to help you get through this difficult time unscathed. After all, the more prepared you are, the better the outcome of the situation.
An IRS Audit: What to Know
First things first, you need to understand what an audit actually is.
The IRS has the right to review and/or examine a company’s or individual’s accounts and financial records. The purpose behind an audit is to ensure the company or individual is correctly reporting tax information to the IRS, in accordance to various laws.
So, when filing your taxes, if all of your paperwork is on the “up and up,” you shouldn’t have much to worry about – even if you find yourself being audited.
If the IRS decides to go through with an actual audit, they’ll be in touch – you can be sure of that – by mail (the dreaded IRS letters). During this time, the IRS will state why they have chosen to start an audit (i.e. the intent of the audit). One thing to note regarding the IRS, they don’t contact anyone by email.
One of the most painful parts of an IRS audit (besides the stress of the audit itself) is the time frame. For example, an IRS auditor usually has a total of 28 months to complete the audit.
When conducting an audit, the auditors can include your tax returns from the past three years. However, if an error is exposed, the auditor can request to include more years. Though, it’s believed that no more than six years will be included in the audit. Yet, this could change depending on how big that error is.
Though companies and individuals find themselves being audited every single year, you can take a deep breath: It’s highly unlikely that you will find yourself in this predicament. Why, exactly? The IRS usually only audits less than one percent of returns each year. This number is expected to even lower, due to the fact that there has been IRS budget cuts.
One of the most worrisome facts regarding an audit is getting assistance. Though there are phone numbers to call, getting someone on the phone can be difficult and timely. If you are uncertain on how to respond, or if you feel you need help and counsel, don’t rely on the IRS to offer tips. The best way to handle an upcoming audit is to get in touch with a tax professional as soon as possible.
Honesty: The Best Policy
Though avoiding an IRS audit is often inevitable, there is a way to make sure the procedure goes smoothly, with a minimal amount of consequences: be honest. When it comes to tax time, and you sit down to file your taxes, be as truthful and honest as possible. Though the IRS may not target you, if you have nothing to hide, an audit won’t be so bad!
Do you owe more than $10,000 in back taxes? Protect yourself. Protect your business. Contact IRS Solver for a consultation.