TOP 10 THINGS WE NEED FOR SURVIVING AN AUDIT
1. *What you’ll need to do.* In an audit, you must convince the IRS that
you reported all of your income and were entitled to any credits,
deductions, and exemptions that are questioned.
2. *Delay when possible.* Postponing the audit usually works to your
advantage. Request more time whenever you need it to get your records in
order, or for any other reason.
3. *Don’t host the IRS.* Keep the IRS from holding the audit at your
business or home. Instead, go to the IRS or have your tax pro handle it.
Field audits (at your place) are used mainly when there is business income;
consult a tax professional before hosting a field audit.
4. *Prepare your records.* If you are missing receipts or other
documents, you are allowed to reconstruct records.
5. *Manage your expectations.* Don’t expect to come out of the audit
without owing something — the odds are against you. Don’t try to
compromise on the amount of taxes to be paid; instead, negotiate the tax
issues with the auditor.
6. *Don’t answer unless asked.* Give the auditor no more information
than she is entitled to, and don’t talk any more during the audit than is
absolutely necessary. Don’t give copies of other years’ tax returns to the
auditor. In fact, don’t bring to an audit any documents that do not pertain
to the year under audit or were not specifically requested by the audit
7. *Read up.* Research tax legal issues by using free IRS publications
and commercial tax guides. If you are still unclear about the tax law or
how to present your documents to an auditor, consult a tax pro before the
8. *Know your rights.* Browse IRS publication 1, explaining the
Taxpayers’ Bill of Rights, prior to your audit. If the audit is not going
well, demand a recess to consult a tax pro. Ask to speak to the auditor’s
manager if you think the auditor is treating you unfairly. If the subject
of tax fraud comes up during an audit, don’t try to handle it yourself.
9. *Time is on your side.* The IRS must complete an audit within three
years of the time the tax return is filed, unless the IRS finds tax fraud
or a significant underreporting of income.
10. *Appeal the results.* When you get the examination report, call the
auditor if you don’t understand or agree with it. Meet with her or her
manager to see if you can reach a compromise. If you can’t live with an
audit result, you may appeal within the IRS or go on to tax court.
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