You’ve received a letter from the IRS telling you that you face an audit. Now what do you do?
First, if the contact from the IRS is in any form other than a letter (phone call, email), then it is a scam. The IRS will only contact you via the U.S. Postal Service and only on official letterhead.
The IRS says audits are determined for two reasons: Your return was compared against similar returns and was found to be out of the statistical norm, or because your return is involved with another taxpayer who is being audited.
Before your audit, there are some concrete steps you can take to make the process easier:
- Organize all the records used to prepare your tax return – receipts, W-2 forms, any other documents. The IRS will accept some electronic records produced by tax software
- Remove any documents not involved with the audit; auditors don’t need information they don’t need
- Only use copies of documents, not originals
- Be ready to answer all questions briefly and honestly
- If you don’t know the answer to a question, note it and get the information to the auditor in the next day
- Stay calm, remain business-like, avoid being belligerent.
Make sure you know what you are signing
The IRS itself warns against signing anything you don’t understand. Ask questions and make certain you are not facing additional fines or penalties.
The IRS will usually audit your most recent returns but can go back three years. If agents find substantial errors, they can go farther back but usually don’t go back further than six years.
The IRS also reminds you that you have rights:
- Professional and courteous treatment by the IRS
- Privacy on IRS matters
- Why the IRS is asking for information and how they will use it
You also have the right to representation and the right to appeal any decision the IRS makes.