The threat of an audit from the Internal Revenue Service can be frightening and stressful, even for those who file accurate tax returns. The IRS can enforce harsh penalties against individuals who are found to have purposefully misreported their earnings. The power of the IRS includes placing liens on a Texas taxpayer’s bank account and garnishing his or her wages.
One of the most important steps in learning how to face an IRS audit is to acquaint oneself with three different types of audits the IRS uses. For instance, some taxpayers as asked to visit and IRS office and speak with a government official for their audit, while other audits are conducted solely through the mail. The final type of audit calls for IRS investigators to visit the taxpayer’s home and workplace to gather important information.
Ultimately, audits only affect a relatively small percentage of all taxpayers. However, the IRS watches for certain triggers that suggest an audit is necessary. For instance, Texas taxpayers who claim particularly large deductions, make numerous cash transactions or simply run their own businesses can appear suspicious to the IRS. In fact, one may be targeted for an audit because they are related or close with another individual being audited.
One of the most important factors in surviving an audit is organization. Filers who have multiple copies of their bank statements, receipts and other important documents can more often prove to auditors that their tax returns were completed correctly. That said, experts recommend keeping conversations with IRS agents brief and avoid going into too much detail, if possible. Saying too much can make auditors suspicious and encourage them to conduct a more thorough investigation.
A certified public account, tax agent or tax law attorney can be an extremely valuable resource, as such experts typically have communicated with the IRS in the past and the possess first-hand knowledge needed to fully grasp the overall audit process.
KDHnews.com, “How to survive an IRS audit” Jason Alderman, Sep. 15, 2013