What To Do If You Are Audited by the IRS?
Most people are terrified when they learn they are being audited by the Internal Revenue Service. They assume that the government is out to get them and the like. However, that is not the case. Here are a few things you should know about an IRS audit.
What is an IRS Audit?
An audit is the review of one's accounts and financial information. Audits are conducted to ensure the amount of taxes reported are accurate.
How Does the IRS Determine Who Gets Audited?
Most assume that if one is under audit, then automatically there must have been an error on their return. This is false. The Internal Revenue Service has different methods to determine who is audited. Some audits are chosen at random. This means that it is computer-generated based on a statistical formula. Another way audits are selected is based on error or mismatch. For instance, a return may be flagged for audit if what the employer reports does not match what was reported on the return.
Do You Have Rights During an Audit?
Absolutely! You have rights as a taxpayer during an audit. Your rights include:
•1. A right to professional and courteous treatment by IRS employees.
•2. A right to privacy and confidentiality about tax matters.
•3. 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.
•4. A right to representation, by oneself or an authorized representative.
•5. A right to appeal disagreements, both within the IRS and before the courts.
If you receive a notice of an audit, or a request for an interview by senior agents, you should immediately contact your tax professionals, especially your tax attorney. While a tax audit could produce a result that requires that you pay additional taxes, as well as penalties and interest, misstatements to IRS agents could produce far worse.
Speaking with agents without your tax professional present leaves you at risk of making an inadvertent statement that could be viewed by the IRS as lying to a federal agent. At that point, your audit could lead to criminal felony charges.
For more information about audits, please visit the IRS's website at www.irs.gov.
See related blogs at: High-income taxpayers at greater risk of tax audit; Missing payroll taxes could double with penalties; Filing FBAR Reports - Don't forget the June 30, 2014 Deadline!;Lien on me--the consequences of federal tax liens