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What to Do if You Are Audited
The IRS has 3 years from the date a return is filed to request an audit. However if a taxpayer is suspected of having underreported their income by 25%+, the IRS can go back as far as 6 years. And where actual taxpayer fraud is suspected, there is no limit as to how far back they may go. Of course being audited by the IRS will rank very high on nearly every Americans list of most feared events but it doesn’t need to be the dreaded experience one imagines. Below is an overview of conditions which might trigger an audit along with advice on what to do and how to proceed in the event you are audited.
Factors Which May Trigger an Audit:
Types of Audits:The majority of audits are correspondence audits which will take place through the mail. Audits which require you to appear before an IRS agent typically occur at an IRS field office and you’ll receive a notice of when and where to appear and which documents you will need to bring along with you. The audit will likely have a particular focus or theme and fortunately it is unlikely your complete return will be picked apart page by page. The focus of the audit should cover the primary areas of emphasis and should last a few hours. The scariest audit is the field audit where an IRS agent will actually come to you. Typically this type of audit will occur at your place of business and is more common amongst small business owners. Also with this type of audit, you will likely want to have a tax professional representing you as the likelihood that you could owe additional taxes is very high.
Preparing for an Audit:
Lastly if, and more than likely it is determined that you do owe additional taxes, better to get it over with sooner rather than later as interest and penalties will rack up quickly compounding your financial pain. If you cannot pay all that you owe at once, setting up a payment plan is a prudent option.
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The information contained on this website is provided as a supplemental educational resource. Readers having legal or tax questions are urged to obtain
advice from their professional legal or tax advisors. While the aforementioned information has been collected from a variety of sources deemed reliable, it is not guaranteed and should be independently verified. Copyright ©1999-2008 ERATE · All rights reserved · California Dept of Real Estate · Real Estate Broker #01292265 · DRE Phone (916) 227-0931 ERATE · 2900 Gordon Ave · Santa Clara · CA · 95051 |
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