Discuss your considered understanding of your taxpayer-client’s options in the face of an unhappy IRS audit...

Discuss your considered understanding of your taxpayer-client’s options in the face of an unhappy IRS audit result.

Expert Solution

Taxpayers should understand that an audit in no way implies suspicion of criminal activity. Tax returns are complicated documents carrying financial data that must be evaluated to confirm accuracy.

The audit process is known as an examination and does not imply that you have intentionally made an error. In fact, the IRS contacts individuals for a variety of reasons.

Taxpayers are chosen through a “random selection and computer screening” process, according to the IRS, that is based on a statistical formula. The IRS compares tax returns against “norms” for similar returns. If your return doesn’t follow the “norms” you may be chosen for an audit.

If your tax filing includes transactions with other taxpayers, such as business partners or investors, and they were audited, you also may be audited.

If you are being audited, the IRS will contact you by mail or telephone, not by email. Included in the notice will be the specific information that is to be examined and what supplementary documents you may need to present.

You have 30 days to respond to an audit notice. Do not put off your response, as the time you spend ignoring a letter can be time that interest builds on the amount you owe the IRS.

Before an audit, you need to get your paperwork ready, seek to understand what the problem is and determine if you want representation.

Gather the forms the IRS has requested. You will want to make sure you have copies, not originals. Organize your paperwork, and make sure the documents you have match up with the year that is under audit. If you realize you have misplaced certain records, immediately call and request that duplicates be sent to you.

At the same time, you have rights and deserve fair treatment. Here are your taxpayer rights during the audit process, according to the IRS:

A right to professional and courteous treatment by IRS employees.
A right to privacy and confidentiality about tax matters.
A right to know why the IRS is asking for information, how the IRS will use it and what will happen if the requested information is not provided.
A right to representation, by oneself or an authorized representative.
A right to appeal disagreements, both within the IRS and before the courts.

ekkarill92 answered 1 year ago

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