April 2nd, 2011
The “I’m Getting Audited” To-Do List
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** It’s Credit Karma Tax Week! Every day we’ll have tax-related posts to keep you in-the-know as you file your taxes. **
An IRS audit is, by definition, a review of an organization’s or individual’s accounts and financial information. A tax auditor’s job is to review this information to ensure the taxpayer or organization is complying with tax laws.
If the IRS comes knocking on your door, here are a few steps to get you ready for a tax audit.
- Don’t panic! If you’ve taken the proper steps while filing, you probably don’t have much to worry about, so take a deep breath.
- Respond to the IRS’s inquiry. You’ll receive an audit notification either by phone or mail. As soon as you get the notification, make sure to respond. Avoiding it could just mean more trouble in the long run.
- Review the inquiry. The IRS may simply request that you mail in information for them to review. Otherwise, you’ll be required to contact the IRS to schedule an appointment with an auditor.
- Know what to expect. Not sure how the auditing process will go? The IRS has a helpful video series to guide you through the process, using real-life examples, so take the opportunity to review them.
- Know your rights. The IRS doesn’t share your personal information with anybody, and you can choose to be represented by either yourself or someone else during the auditing process. For a full list of your rights during an audit, go here.
- Get it together. Organize all of your documentation to have for the audit. Make sure to have copies made so if the auditor requests to keep any documents, you’ll still have your own.
- Review your return. Know points of interest the auditor might discuss. For example, if you’re self-employed, be aware of any business expenses that you’ve claimed so you can discuss them properly and back them up with receipts or other documentation.
- Be professional and courteous. Your auditor will appreciate a respectful attitude even while discussing difficult personal financial information.
- If you disagree…. You have several options if you don’t agree with the adjustments made by an auditor. You can request a conference with a manager, fast track mediation, or an appeal. Fast track mediation allows for a small business or taxpayer to use an IRS appeals officer to mediate the dispute, and it usually is settled in about 40 days, much shorter than the typical appeals process. Make sure you understand the process of whichever option you choose.
Well, that’s all for us here at Credit Karma Tax Week. Make sure you hit the April 18th deadline, and if you have any additional comments or questions or just need to vent about taxes, Tweet us or join the conversation at our Facebook community.
Disclaimer: The answers given here should not be construed as tax or legal advice. They should be taken as tips only to be acted upon at further investigation and research on the reader’s part.