Being Audited? Call Your CPA Now

A tax audit is a procedure where your business or individual financial records are examined by the IRS to make sure you filed your tax returns correctly. The IRS wants you prove that your initial tax return was accurate and complete. If they find meaningful misreporting or errors, you will need to pay the recalculated amount of tax and interest penalties. Here’s what you need to do if an audit notice is sent to you.

  1. First, you should call the CPA (Certified Public Accountant) who prepared your tax return. Being subjected to an IRS-mandated audit can be a troubling experience for some. Beyond that, it is expensive, time consuming, and often frustrating. Your CPA can explain the entire audit process and help you prepare for it. Your CPA can also represent you if you’re unsure about the audit process or if you are uncomofortable about a field IRS agent visiting your workplace. 
  2. Second, with your CPA, you should ask why your tax return was chosen for an audit. Your tax can be audited for various reasons such as certain activities on your return that don’t match the statement you submitted, random selection, automatic flags where computer programs determine far-flung scores on returns and related assessments where your report involves dealings with someone else being checked. A notice number can be found on the upper right-hand section of all IRS letters or notices. The numbers will tell you about the problem with your tax return.
  3. Third, Since there are various kinds of tax audits, you should know how you’re being audited. This will help you determine the documents you need to prepare and where you should submit them or whether you should call a tax lawyer. In a correspondence audit, you will be asked for more information about a part of your tax returns. The IRS usually looks for checks, receipts and other similar information. In an office audit, you are asked to bring specific documents to the local IRS office and the audit is performed there. In a field audit, an IRS agent visits you to perform the audit personally.
  4. Fourth, once you know how you’re going to be audited, you should gather relevant documents and receipts. Don’t send in original documents or the only copy you have. Just send in what is asked of you. In case you cannot find the necessary documents, request duplicates right away as the auditor will not accept excuses for not having the documents. Once you have the originals and copies, organize them.

An audit can be frustrating and annoying, but IRS audits are a part of business. Take comfort knowing that your trusted CPA can help you through the process.

11 May 2016

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