An IRS audit is painful.
Even if your return is 100% accurate and the IRS compliments you on your diligence and honesty, it will require a lot of your time and cause you a lot of stress.
But there are things you can do to minimize the pain and the stress.
Here are our top 5
- Don’t take it personally – It is normal to get a little miffed when you receive an IRS audit notice. We suggest you lie down for a few minutes until the feeling passes. If you are defensive at the beginning of the audit, the IRS auditor will assume you have something to hide and will expand the audit to other areas and other years. While you shouldn’t feign happiness about being audited, at the same time you don’t want to appear angry or put out by it.
- Do tell the auditor you will cooperate – The first thing you should do (after seeking a consultation with an experienced tax attorney or CPA) is let the IRS auditor know that you intend to cooperate. IRS examiners have many files to handle and taxpayer cooperation makes their lives much easier. The easier you make it for the auditor, the better it will be for you if and when you have a dispute over an adjustment or point of law.
- Do consult with a tax professional – Experienced tax attorneys and CPAs are used to dealing with IRS auditors. They know what types of documentation must be provided, how it must be provided and how to explain it. In addition, a tax lawyer/CPA knows the law better than a typical IRS auditor and this gives you and advantage in audit negotiations. Having a tax professional interface with the IRS auditor in your place will greatly reduce your stress and should get you a better audit result.
- Do ask the auditor for time to assemble and organize your records – Your tax representative will do this for you. The IRS must give you a reasonable period of time to gather your records and organize them in preparation of the audit.
- Don’t tell anyone you are being audited – The fact that you are being audited is confidential. Nobody needs to know it except the IRS auditor and your tax representative. If you tell others, it is almost a certainty that they will in turn tell someone. Before you know it your banker, your employer and your hair stylist will know that you have been selected for an IRS examination. Of course, by the time the gossip serpentines its way to someone you care about, you are no longer merely being audited, you are being tried for tax evasion and on the verge of getting the death penalty. Do yourself a favor. Be quiet.
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