IRS Tax Audits - How can I avoid them?

by M.E. Hansen, All rights reserved. Do not duplicate without permission

More than You want to Know about Audit Procedure.

Answering THE NOTICE

The IRS audit notice will suggest a time and location for the audit to take place. However, you have the right to ask the IRS to reschedule the audit to accommodate you.

A postponement may be sought to get more time to pull together records or resolve a scheduling conflict. The IRS usually is reasonable about granting postponements as long as it does not suspect the taxpayer of engaging in a strategy of delay.

A change of location for an office audit can be requested if you have moved since filing your return and now live far away from the IRS office that sent the audit notice. The audit may be transferred to an IRS office nearer you.

Representation: You have the right to be represented by a tax professional when dealing with the IRS during an audit. You don't have to attend the audit if you don't want to. The IRS cannot compel you to appear in person unless it has a particular reason for meeting with you, which happens in very few cases.

Having a professional handle the audit for you can be a very good idea that is well worth the expense.

• You'll avoid the fear and anxiety that most taxpayers experience when dealing with an auditor and emotions that could lead you to commit costly mistakes.
• A professional will know much more than you about expediting the audit to a satisfactory conclusion.
• Having a representative appear for you can help contain an audit. If an auditor turns to you and asks an unexpected question, you'll probably feel the need to give some sort of spur-of-the-moment response, and in the process perhaps tip off the auditor about other items on your return to examine. But if the auditor asks an unexpected question of your representative, he/she can give an answer such as, I don't know I'll have to check with my client.

Auditors are under pressure to dispose of their case inventories in a timely manner, so they are less likely to engage in such time-consuming "fishing expeditions" when dealing with a professional representative.

PRESENTING EVIDENCE

The audit notice also will specify the items on your return that are being questioned and the records you should bring to support them.

Bring to the audit only records that were specifically requested. This keeps unrelated items that might be questioned out of the auditor's sight

If the auditor asks for any further records, have him request them in writing. This eliminates any misunderstandings and creates a paper trail that may be valuable in future proceedings.

Organize records thoroughly before presenting them to the IRS. Auditors direct their efforts to the areas that seem most likely to be productive, and sloppy record keeping may be taken by an auditor as a sign that a closer examination of the books could be rewarding.

In contrast, comprehensive, organized records may give the auditor the impression that little is out of order and could bring the audit to an early close.

Next Tax Audit Page: IRS Tax Audit Procedure (cont'd)