What happens if you get audited?

What happens if you get audited?

There is a five-letter word most of us fear: audit. Movies and television shows have portrayed being audited as a scary experience with men in suits coming to your home and grilling you like a common criminal. The good news is that audits are not like this. Generally, they are much simpler affairs. So, if you are being audited, here is what happens.

The Most Common Audit

One unknown fact is that over 75 percent of IRS audits are done through the mail. With mail audits, the IRS is seeking clarifications or further documentation for your return. This can happen for simple mistakes, such as a transposed digit, or for larger issues such as a confusing itemized deduction. Generally, if you send back what they need from you the matter will be closed with no further action.

Heading for the Office

The next audit level is an in-office audit. In this case, you should go to your local IRS office. In this case, you may want your accountant or lawyer to attend the meeting with you. You will also want any pertinent documentation pertaining to the issue they want to discuss.

They Come to You

When an IRS agent comes directly to your home or business, this is called a field audit. While this may feel overwhelming, stay calm. They generally reserve a field audit for when a lot of questions arise over an audit, or a lot of red flags appear. In this case, you will want to be prepared with your lawyer, accountant, and documentation.

After the Audit

In many cases, once the audit is over the IRS will accept your documentation and move on. If the IRS finds changes that need to be made in your return, you can either agree to these changes or contest them. If you do contest the changes, be prepared for more meetings and a formal appeals conference. If you are audited, you can likely expect a change to your taxes since around 90 percent of audits result in a change.

This entry was posted in 4506-Transcripts, business taxes, Financial, IRS and Tax Transcripts, IRS Tax Audits and tagged , , , , . Bookmark the permalink.

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