Receiving notice of audit from the Internal Revenue Service is the kind of news that no one hopes to get. Even if you have nothing to hide, it is never convenient to make time for an audit and submit your finances to additional scrutiny.
Although the IRS recently scaled back the number of audits it performs, heigh-earning individuals still face significant risk. If you receive an audit notice, the way you respond to it may greatly impact the outcome and the penalties you may have to cover.
In most cases, it is daunting to face an audit without professional guidance. The complexity of the tax code, especially considering the large scale overhaul the Trump administration achieved at the end of 2017, is likely beyond the grasp of any particular person, and it is vital that any person facing an audit understand the nuances of these laws and how to navigate them fairly and efficiently. An experienced tax attorney who understands the audit process can help you assess your circumstances and protect your rights as you work toward a fair resolution.
Understanding the process
Although audits are not pleasant experiences, and may lead to significant consequences, they are not a death sentence. You may face additional fines and other penalties, and about 75 percent of all individuals who undergo an audit do ultimately face these.
However, the IRS is not above the law, and must similarly abide by certain guidelines and time tables. In this way, receiving notice of an audit is similar to receiving white collar criminal charges. While you certainly face potential punishment, there is no need to panic. In fact, panic is only going to cloud your judgement and lead to further potential difficulties.
Unless your tax dispute is a relatively simple matter, it is likely that you need a significant amount of time to gather and prepare your documents. Consider requesting an extension on the amount of time allotted to deliver your documents and use this extra time to prepare a strong, well-organized presentation of your finances, and also to familiarize yourself with applicable tax law and taxpayer’s rights.
Protect your privacy
An audit can feel like an exceptionally invasive process. Be mindful of the information that you must provide the IRS and, more importantly, the information that you do not have to provide. There are very few justifications for volunteering information beyond what is specifically required.
Don’t hesitate to use every tool you have available to approach your audit professionally and effectively. The future of your finances may depend on your commitment to this process, so it is very important to address these issues directly and fully as soon as they arise.