Getting an IRS audit notification can be stressful. One thing we recommend is never tackling an IRS audit on your own.
Keep in mind that the law requires you to keep all records you used to prepare your tax return for at least three years from the date the tax return was filed.
If this situation occurs, we recommend understanding:
1. The process,
2. The reason you’re being audited,
3. Your rights and responsibilities, and
4. How to appeal if you don’t agree with the resolution.
How will the IRS notify me of an audit?
If your account is selected for an audit, the IRS will initially notify you by mail. They will not initiate contact by telephone. In this letter, the IRS will provide all contact information and instructions.
Where is an IRS audit conducted?
Based on the complexity of the tax return, there are two ways an IRS audit can be conducted, by correspondence or in person.
In a mail audit, the IRS will provide you with a written request for specific documents about certain items shown on the tax return such as income, expenses, and itemized deductions. Once you gather all the requested documents, you will have to send them back by mail as indicated in the initial notification.
An in-person audit may be carried out either at the office of an IRS revenue agent (desk audit), or at the taxpayer’s home or business (field audit). In both cases you will be asked to provide documentation to verify the accuracy of the tax return. If you choose to hire professional representation for a field audit, it can be conducted at your representative’s office instead of your own.
The IRS will notify you of the due date of your response; however, an extension can be requested.
What rights do I have during an IRS audit?
In an audit, you have a right to:
· An explanation of the audit process.
· Representation by an attorney, CPA, or enrolled agent.
· Claim additional deductions that you didn't originally claim on your tax return.
· Request an opinion from the IRS's national office on specific technical issues that arise during the audit.
How long does it take for an IRS audit to be resolved?
This can vary greatly depending on several factors such as the time you take to answer back, how quickly you provide them with the requested documentation, etc. A simple audit can be expected to wrap up within three to six months. If the auditor finds issues, they may want to expand the audit to other areas or years.
There are additional resources available to support us in the event of a long IRS audit, including utilizing a taxpayer’s advocate or requesting assistance from the state’s senators.
Do I need a tax expert to handle an IRS audit?
We strongly recommend hiring expert representation for your IRS audit. Proper representation can assist in obtaining a more favorable audit outcome. This is possible by assisting in substantiating deductions and tax positions which may be helpful in reducing penalties and interest due.
There are many reasons why hiring a tax expert is a good idea, to handle an IRS audit is one of them.
Can I appeal to an IRS audit resolution?
If you disagree with the audit’s resolution, you can appeal.
Our firm provides specialized technical expertise to assist in communicating with the IRS and representing you. Please reach out if you find yourself facing an IRS audit and see how we can help!
Do you need help handling an IRS audit? Contact us.
This post may not contain a complete analysis of the tax issues discussed herein and does not represent official conclusions or advice regarding the matter.