The IRS can select a return to be audited at random. It doesn’t necessarily mean that you did something wrong, it just means that the IRS wants to verify the information that you reported on the return.
“It is important though when you get that letter to retain a professional who can help you identify what information you need to provide to the IRS,” says Lydia Desnoyers, CPA, CFE.
Luckily, the majority of IRS disputes can be easily avoided or diffused with just a little bit of planning. Below are tips that will help you manage an IRS audit.
Don’t Panic If You’re Audited By The IRS
While the IRS certainly contacts those who’ve made errors or omissions on their tax submissions, they also contact several people and businesses who have been 100% compliant. So before you start worrying needlessly, understand you may fall into the “due diligence” category for whatever the issue may be.
Know If You’re High Risk For An IRS Audit
Just as the IRS sometimes double-checks their work with compliant taxpayers – they also look more closely at certain groups with a history of tax discrepancies. Doctors, attorneys, and other high-income earners are also scrutinized for inaccuracies in reporting and payments. If you fall into a high-risk group, just be sure you keep very detailed records and back ups of all financial entries.
Communicate With The IRS During An Audit
Don’t just assume because IRS officials deal with taxes on a daily basis that they’ll automatically understand your own unique, complex situation. If there are misunderstandings or miscommunications, make sure to clarify them. However, we highly recommend that you speak to a tax professional before engaging with the IRS!
Self-Prepare Your Taxes With Caution
Sure, every IRS form comes with instructions – but if you’ve ever tried using them, you already know they don’t address every concern or answer all your questions. Assume you know what you’re doing and you could end up making a costly mistake. Alternatively, of course, you can engage a “Paid Preparer” (like an accountant or CPA) and be more confident in your submission. In most cases, your CPA will be able to save you significantly more in taxes than you pay him or her – so it’s a win-win scenario!
These are just the first steps you should take when being audited by the IRS. Click HERE to download the full Desnoyers CPA guide to handling IRS audits. If you’d like advice regarding your specific situation, reach out to us today!
For help managing your business finances, check out our services page. Desnoyers CPA, LLC, is an accounting firm that offers a wide range of services for business owners. Check out our blogs and join our mailing list to get more information for small business owners seeking experienced financial advice.
Comments