How To Survive An IRS Tax Audit

How To Survive An IRS Tax Audit


You’ve just received the one notification everyone dreads: the Internal Revenue Service (IRS) has decided to audit your tax returns. Don’t panic: 1.4 million Americans were audited in 2009 with an even greater number expected to be audited this year and beyond. The federal government is operating with a record debt and the government wants to make sure your contributions are sufficient.

Get Prepared

tax formsWhile you shouldn’t panic, you should be prepared to act decisively. That means reading your IRS audit notice carefully and following the instructions precisely. You will have thirty days to respond which is plenty of time for you to get organized. Likely, you are being audited for one tax year only which means you should do the following:

Pull out your tax records. Yes, the IRS is auditing taxes for 2005 which seems like ages ago. You do keep records going back for many years, right? That’s good, because you’ll want to examine your return for that year and check all of your receipts. If records are missing or lost, get new copies ASAP.

Examine everything closely. Be prepared to explain everything on your tax return line by line. Put yourself in the shoes of your IRS auditor: does every deduction pass scrutiny? You may not recall why you took $13,000 in charitable deductions that year, but you will soon need to show proof of same. In the Jan. 15, 2004 issue of “USA Today,” Thomas A. Fogarty warned that taxpayers sometimes wildly inflate the value of donated property. Hunt down receipts to prove everything including the property’s value at the time it was donated.

Seek professional guidance. If you have an especially complicated tax return being audited, then call upon the services of a tax accountant for assistance. Use the same person who completed your return to help you; she may need to join you when you are audited. But be warned: in the Feb. 10, 2002 issue of the “Los Angeles Times,” Liz Pulliam Weston noted that when it comes to bringing along someone for the audit, “only enrolled agents, certified public accountants and tax attorneys are allowed to handle such matters.”

Bring copies, please. Expect that whatever documents you bring with you to your audit may end up being lost or misplaced. In any case, make copies of everything and only bring those copies with you. At the same time you should not bring along extraneous information; you want to stay organized and demonstrate to the auditor that you have a firm grasp of your finances.

Be confident. Know your rights before meeting with the IRS, confidently outlining your case as well. But don’t be cocky; you’re being audited and you need to be prepared to answer the auditor’s questions. Simple “yes” or “no” answers will usually suffice; talk too much and you may raise the auditor’s suspicions that you are hiding something.

The End

If the auditor proposes changes to your return and you accept them, then the audit is over. You may owe additional taxes and penalties, but audits are officially concluded once both parties come to an agreement. If you want to appeal the IRS’ decision, there are certain procedures you should follow as outlined in the IRS article, “The IRS (Examination) Process.”


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Categories: Consumer Tips

About Author

Matthew C. Keegan

Matt Keegan is a freelance writer and editor as well as publisher of "Matt's Musings", his personal blog. Matt covers campus, consumer, business and financial topics on various websites and blogs, and has been published in the "Houston Chronicle", "Sam's Club Magazine" and "Wisconsin Golfer".