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Health & Fitness

5 Things to Do in the Case of an IRS Audit

5 Things to do in the case of an IRS audit

This past week I had a husband and wife client into the office.  As I prepared their taxes I noticed the husband seemed to be distracted and kept checking his smartphone.  This is not unusual.  Don't we love those things?! Towards the end of the tax interview I was talking of the beneifits of H&R Block's  "Peace of mind".  ("Peace of Mind" is a product that has as one of it's features assisting customers in the case of an audit.)  I learned his dad had had his taxes done with someone who promised to do it 'cheap' and to 'get more back than others can get'.  This was true, or so it would seem, and the word of mouth advertising spread for this tax preparer and the fat refund checks they could generate for their clients.  Evidently, The IRS noticed too, and decided that the benefits that were being taken were not legitimate and promptly issued audit notices for all of that tax preparer's clients.  

Internal Revenue Service tax audits can be complicated and time-consuming, but the right tax preparation can make them less stressful. Taxpayers facing an audit should remember these five things:

Seek professional help. Upon receiving an IRS audit notification, taxpayers should meet with their tax professional to discuss what the audit notification means, what is being requested and what records are needed.

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Seek representation. Correspondence audits are handled via mail, field audits have auditors visit a home or business in question, and office audits require taxpayers to report to an IRS office. Depending on the type of audit and individual situation, taxpayers may represent themselves or seek assistance from a certified public accountant, lawyer or enrolled agent. Enrolled agents are federally authorized tax practitioners empowered to represent taxpayers before the IRS.

Organize. Ideally, taxpayers should keep complete, organized financial records for the past seven years. Gather all receipts, checks and other records relevant to the audit. Be thorough; having the records the IRS requests readily available will help the audit go more smoothly.

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Be concise. Taxpayers should only give the auditor copies of documents the IRS specifically requests and answer all questions honestly. Do not volunteer information that is not requested.

Appeal. If taxpayers disagree with auditors' findings, they can file an appeal with the IRS. Appeal options include meeting with the auditor's supervisor, or filing an administrative appeal to the U.S. Tax Court, U.S. Claims Court or the local U.S. District Court.

 

Of course, the best audit is the one that doesn't happen. To lessen the likelihood of being audited, taxpayers should report all income and only claim credits and deductions they are entitled.

 

John Kendrix is a Senior Tax Advisor @ H&R Block in Canton.  You can reach him at the H&R Block office @ 770-479-2159 - or you can post your question in the comments section below. 

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