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3 Tips to survive an IRS field audit

| Dec 5, 2016 | Internal Revenue Service

While most IRS audits are completed via written correspondence, the agency still utilizes in person audits. When an IRS agent requests to come to your home or business, the situation is serious.

Generally, experienced agents are assigned these cases and they can seek orders to compel disclosure. Here are three tips for surviving one of these IRS tax audits.

Get documents in order

Poor record keeping practices can easily cause problems. Whether a complex personal financial portfolio or a start up business that took off fast, you may need to spend some time getting your records in order.

The law requires you to keep all records you used to prepare your tax return for at least three years.

This may even be the time to develop a better organizational system. Digital tools such as portable scanners can help avoid paper messes. But consider backing up all digital files onto a portable hard drive or other device to avoid loss of data. The IRS will not likely be forgiving if a computer crash wipes out all your records.

Do not volunteer information

Whether scheduling the audit or at the actual meeting, only answer the question posed. Maintain a respectful tone during all communications.

Never make a false statement or lie to cover up a mistake. The audit may uncover this and it will place you in an even more difficult position.

Speak with a tax attorney

Why can’t your accountant handle the situation? Your accountant may have caused the issue. But you also need to recognize that conversations with your accountant are not protected and he or she could be summoned to testify against you. On the other hand, communications with an attorney are protected by the attorney/client privilege.

A tax attorney can protect your rights during the process by handling correspondence and offering advice during an in person audit. If you disagree with the result of the audit, your attorney may also need to handle an appeal. It is always best to involve an attorney as soon as possible.

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