After recently finishing your customers’ taxes, tax season is ending, and it’s time to unwind. Then, the IRS chooses one of your clients for an audit, as though you haven’t handled sufficient pressure over the past few months. As a range of new chores piles on your plate, all the anxiety and stress return.

Though they can feel daunting, IRS audits are a routine occurrence in tax practice and are usually carried out at random. This post will guide Alpharetta CPA through what they need to know and do to guarantee the audit’s success and their return to their regular activities right away.

How to address an IRS audit

1. Understand the scope of the tax audit.

Only a few topics from your IRS audit letter are covered in the mail audits. 

Work involved in office and field audits is more. You must compile the records and documentation the IRS requests and get ready to respond in-depth on your actions and financial situation.

Regarding office and field audits, unless you are knowledgeable about IRS processes, you are strongly advised to have a licensed tax expert (enrolled agent, CPA, or attorney) represent you and put forth your tax return positions before the IRS.

2. Prepare your responses to IRS questions.

Prepare a thorough answer to the IRS’s questions about the items in the letter or document you received for a postal audit. 

Prepare for field and office audits for the IRS officer or agent’s meeting. Get all the data the IRS has requested and prepare it for presentation. Get ready for probable IRS questions about unexpected bank deposits or extra money. The IRS agent will also probe your employment, family, and outside enterprises. You will basically have to be ready to present a summary of your whole year’s events.

Should you lack documentation proving anything on your return, you could have to recreate it from outside sources or third parties. If a third party confirms an unreported item, you can employ an affidavit, among other methods.

3. Advocate your tax return stance and respond timely to IRS information/document requests.

Should the IRS believe your return contains an adjustment, the agency will begin probing more inquiries. You will receive an information document request, which you must properly address by the date. 

The IRS could disagree with you, claiming, for example, that you should have declared more income on your return or that you deducted something illegal. You can show the IRS your rendition of the facts and tax law if you disagree.

The IRS will ultimately close the tax audit, either suggesting changes to your return or not at all. Should you disagree, you will receive an IRS report and a letter allowing you thirty days to appeal (often known as the 30-day letter).

4. Ask for a suitable venue if you disagree with the findings.

You can appeal with the IRS Office of Appeals within thirty days. Thirty days from now, the IRS will mail you a Statutory Notice of Deficiency notice. 

Remember that in mail audits, the letter suggesting changes also functions as a thirty-day letter. By ignoring this letter, taxpayers usually lose their ability to appeal the IRS audit results.

Conclusion

If you disagree with the audit’s final findings, you have many paths of appeal. At that point, though, we advise you to consult a tax specialist to determine the best course of action and the probability of success.