Did you recently receive a letter from the IRS that you are being audited? Are you wondering what this all means to you?
An IRS Audit is an review/examination of an organizationâ€™s or individualâ€™s accounts and financial information to ensure information is being reported correctly, according to the tax laws, to verify the amount of tax reported is accurate. -IRS.gov
If you feel that your original tax return was correct then prove it. If you can do this your audit will end there. If the IRS finds mistakes or you intentionally gave false information on your tax return, youâ€™ll have to pay the new amount of the return, plus any penalties. In the event that you are being audited, here are some helpful tips:
Find out why
If it is not specified in the letter you received then it’s up to you to make phone calls and find out. Here are reasons one can be audited:
â€¢ Your actually wages, including cash wages, 1099 and W-2 forms do not match up to what was reported to the IRS.
â€¢ Someone you have done business with is being audited.
â€¢ The computer flags your returns.
â€¢ Occasionally the IRS just randomly audits people.
Types of Audits
There are various kinds of IRS audits that all have their own conditions. It’s important to know the type of audit you are facing so you know exactly what you need, where to send them, and if a tax lawyer may be needed.
â€¢ Correspondence Audit: the IRS service center requires you to send copies of canceled checks and receipts to their office so they can verify the deductions on your return remotely.
â€¢ Office Audit: the IRS Service Center requires you to bring certain documents in to your local IRS office where you will have your audit.
â€¢ Field Audit: An IRS agent will come to your business in person to do the audit.
â€¢ Taxpayer Compliance Measurement Program Audit: The most thorough type of audit, where your entire tax return must be proved by documents, including birth and marriage certificates. The reason for this type of audit is to update the data used to write the computer scoring program.
Collect and Organize
Once you know what you are required to do, it’s important to begin sorting and organizing all your records, receipts and documents pertaining to your audit. Make copies of everything you need to send and keep the originals for your own records. If you can’t find an important document you need, request duplicates right away, since the auditors will not accept or care that the documents are lost.
It’s important to have all your documents organized, as this will show the auditor that you are a responsible taxpayer which may result in a shortened audit investigation for you.
If you are facing an IRS audit and think you may own back taxes and penalties? IRS Fresh Start Initiative can help you get back on track and it make it easier for you to pay back your taxes. If you feel you need to talk to a professional, contact us at Optima Tax Relief.
About the Author
Devin Finley is a freelance writer and tax relief expert. Devin writes on a multitude of financial and legal topics. He enjoys collaborating and strategizing with other professionals to ensure tax & debt clients receive competent and beneficial representation. For more information Visit http://optimataxrelief.com/