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When it comes to managing complex tax audits, individuals and businesses can often find themselves feeling overwhelmed and unsure of the best course of action. It doesn’t matter what your financial situation looks like; an audit from the IRS is a nerve-wracking experience that all taxpayers dread. If someone is found guilty of tax fraud, evasion, failure to pay, or other tax crimes, there are steep penalties, including jail time and fees. For tax crimes, the IRS has to prove beyond a reasonable doubt that you intentionally filed false tax returns. Even if no crime has been committed, and it was a simple mistake, understanding and implementing these strategies can help individuals and businesses navigate complex tax audits with confidence and achieve a favorable outcome
Initial Response
When you get the initial audit request by mail, read all the instructions carefully. The letter will include all relevant information such as the office location, how to contact them, and the documentation they are requesting from you. Audits are conducted by mail or in-person to review all the documents. For more complex audits, you may be required to be interviewed by the IRS revenue agent. You may also request to meet in person if you have too many documents to send through the mail. These are strategic decisions that you should make after consulting with an experienced tax attorney.
Providing Documentation
The most important thing to remember is to maintain accurate and organized records and documentation, both before and after tax season. Once the auditing process starts, time is of the essence, and you should have immediate access to any documents the auditor requests.
Many audits come from deductions, so having the appropriate documentation is important evidence to back up your claim.
The way you organize your documentation can paint a clearer picture for the auditor. Delivering a pile of documents in a bank box may demonstrate your frustration, but it also gives the auditor the opportunity to come to their own conclusions. Use the instructions from the letter to label the necessary documents, or even include a table of contents to make the process run more smoothly. Organizing the documents this way can also give you a chance to review the documentation yourself and make sure that you have provided all the necessary information.
Communicating with the IRS
The IRS will never call you directly (as they only communicate to taxpayers by mail), but you may use the information from the letter to call directly. You may ask clarifying questions, but keep the conversations short and only give information that is relevant to the audit. If you are unable to meet the deadline to present the requested documentation, then you should communicate with the auditor as soon as possible for an extension. It is strongly recommended that you have an experienced tax attorney working with you through this process.
If you are reviewing the information in person, study the documentation you have provided carefully, so that you can answer related questions confidently and accurately. An auditor is not likely to have any additional information that has not already been provided by you, so the only way they can ask a question that you don’t know the answer to is if you have not studied and organized the requested documents. Remember that it’s the auditor’s job to zero in on any inconsistencies, so only answer questions or provide documentation for exactly what they’re requesting.
If the prospect of answering an audit on your own seems overwhelming, consider seeking assistance from an experienced tax attorney. At Weisberg Kainen Mark, PL, we provide our clients with effective legal advice and can assist with responding to audit requests. For a free consultation, contact our office online, or call (305) 374-5544 today.
Weisberg Kainen Mark, PL
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