No one ever wants to receive the dreaded IRS audit letter in the mail. Even if you do your best to do things by the book, the audit process can be time-consuming, frustrating, and result in an adjustment to your tax return.
The keys to an IRS audit are (1) limiting the number of items they examine, (2) limiting the number of years under audit, and (3) presenting the information to the IRS in a neat, organized fashion. IRS auditors (“revenue agents”) have a never-ending stack of audits to complete. If you try going to an audit meeting with a shoebox full of receipts, it’s unlikely the revenue agent will take the time to see if the receipts match the tax return.
Generally, the IRS will open one tax year for audit. If there are many adjustments to that year, they will open other years. It’s incredibly important to be well prepared for the audit. You want to enter the meeting with organized ledgers and backup documentation to support the deductions on the return.
Many taxpayers have lost some or all receipts. In these situations, you must convince the auditor to accept other information, such as credit card statements or bank statements, to prove the expenses incurred.
If your case is more serious – perhaps some items on the return were exaggerated or fabricated – you want an experienced tax attorney to limit exposure to civil penalties. In extreme cases, audits can be referred to the IRS’s criminal division as well.
One of the most stressful things about IRS audits is it can take years to complete. When beneficial, I do my best to alleviate this stress by pushing the audit through as quickly as possible so you can move on with your life.
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