It is a legal requirement that the Internal Revenue Service occasionally examines your tax return to verify that your income values and details on deductions are correct. In such a case, the IRS will get a little keener with your tax information.
The IRS typically sends you a plain brown envelope with the mark ‘Official Government Business’ that contains the Internal Revenue Service’s return address. It is no secret, no one loves this notification. But the truth is, at one time or another, you will receive this audit notification.
What options do you have then? You can’t return it to the IRS address shouting “Hey, I’m not in for this!”
That leaves you with the only option there is: brace yourself for the audit. A tax professional will tell you there is really nothing to be scared of.
At times, the brown envelope is not actually an audit notification. While you are likely to think of a full-blown tax audit as the immediate impulse, the notice might be completely something else.
The tax authority might just be notifying you of the extent of your engagement with the IRS. You might normally make a math error on your submission and the IRS would want to let you know about it to have it fixed.
At times, you can receive the form if your W-2 form has something that doesn't agree with your tax return. In any case, you can normally clear up any of these discrepancies with mere exchanges of information through mail.
You will be glad to know that working with a tax preparer will seldom leave room for any of these errors. The professionals have vast experience dealing with tax and may hardly ever have an error in their submission. This is one of the major reasons why businesses prefer to hire a professional to prepare their tax details on their behalf.
This is the time to put together all the information relating to your business, individual records and professional details. You need to have all information resources that pertain to your taxation.
The process will be much stress-free if you have been keeping good records. Simply, always have adequate record keeping all year round. This may be invaluable in the event of an audit.
The audit may at times fid you less prepared with the required information. In such a case, go back to the transactions that happened through that year and try to reconstruct records in their most accurate form.
You can get copies of records on expenses from where you have claimed them. For medical expenses for instance, you should be able to retrieve medical records from the doctor or the hospital where you were admitted. They are likely to always have the records on file.
Also, do not hesitate to call up your place of employment to ask for copies of 1099 forms or W-2s. You will also be able to get your mortgage interest details from your mortgage company. You need to try and recall dates for your various expenses.
One common mistake is to call up the IRS on your own to seek some details regarding your audit. This is never advised. The authorities will definitely ask you questions and in the process, you can unwittingly reveal crucial information that only acts to potentially cause more problems.
The best thing is never even to attend the audit yourself. Assign a tax professional that has been licensed to practice before the Internal Revenue Service to handle the tax authority and attend the audit on your behalf.
The tax professional knows what information to disclose and which ones to reserve. You only need to provide them with Form 2848, an IRS power of attorney, and a copy of your audit notice.
Tax professionals such as preparers, enrolled agents, CPAs or tax attorneys may provide you the best representation at an audit. These professionals are specifically trained in tax law and have a high level of understanding of the system.
They will represent you better than you can ever represent yourself. It may be unimaginable for a lay person to read the entire tax code. The professionals on the other hand have gone through the grueling process of training themselves in this area.
In addition, you need to realize that the IRS auditor is not your friend, so remain as professional with him or her as possible. They pay taxes too. And the audit atmosphere is always engulfed by the implicit hypothesis that you may have had something amiss. So answer questions only when asked.
Audit results can go either way. A good majority of them have revealed instead that the IRS actually owes the taxpayer. Yours could as well turn out the same way. And if you hire a tax professional, your chances for such an outcome are increased by a significant margin.
Shannel Reed|
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