Have you filed this year’s tax return? Are you sure that all information that you have filled in the tax forms is correct? In case, IRS has doubts on the contents of your return, they have authority to audit you. From IRS’ point of view, the successful tax audit is the one that makes the taxpayer liable to pay large tax due. One of the biggest reasons why you get so much respect from IRS is that you have tried to play with the numbers in order to reduce your tax amount. It does not mean that every person who has received the letter for audit has committed mistakes intentionally.
IRS letters are not blaming anyone, if you can answer the IRS question you can come out the mess without even paying a penny. However, if you fail to answer their questions and provide apt proof of your deductions and tax relief options, you would need to pay the remaining amount in addition to the penalties and interest. If you could not pay the amount in time, IRS is authorized to garnish your wages and seize your bank accounts. Whenever you receive letter from IRS, don’t get panic. Go through it thoroughly and try to figure what information IRS wants from you. If you are ready with the information or confident that you can arrange it without any difficulty, you should respond the letter and ask for the meeting.
In case, you find that it is not easy for you to face the complicated questions of IRS, you should call the IRS and inform them that you are hiring a tax professional who will represent your case. It will allow you in buying time and IRS will get an impression of a responsible person. Make sure, you have taken the name and badge number of the IRS agent you had a word after receiving the letter. Also, don’t forget to make a note of the time and date of the conversation. If IRS denies that you never called them, you can show these details as proof of your conversation. In the same conversation, you can clear the reason for auditing.
Once you are clear about the reason of audit, you should arrange all the required documents that too in original at the earliest. Prepare yourself beforehand. Majority of people tend to arrange the documents a day or two before meeting with the IRS. Organizing your records is the most important thing if you want to come out of the audit without promising to pay anything. If you are throwing a bunch of receipts, invoices and bills on the face of IRS agent, you are most likely to get notice of deficiency. Meeting with the IRS will be full of complicated questions. So prepare yourself or hire a tax attorney.