Regardless of the circumstances, getting audited by the IRS is something no one wants to deal with. However, it can happen for various reasons, some more severe than others.
Knowing how an IRS audit works helps you prepare to address the situation as calmly and collectedly as possible.
How the process works
The IRS first sends a letter informing you they have selected you for an audit. The letter should also specify how the audit will proceed and explain what information you should have available. Keeping records at least three years back helps ensure you have the necessary items on hand, though some situations can require older records.
The IRS occasionally conducts audits through in-person interviews, but many audits are conducted through the mail, and some are conducted in an IRS office or at your home or business.
An audit lasts until the IRS determines whether or not there are necessary changes needed regarding your taxes. The length of time this takes varies in each situation. Responding to the IRS promptly can help resolve the audit sooner and may reduce added interest and penalties if tax is assessed.
Preparing for an audit
The IRS may decide on auditing you for several reasons, and getting audited does not necessarily mean the IRS suspects you of criminal activity. As a taxpayer, you have rights including the option of seeking review through IRS Appeals (and, in some cases, court) if you disagree with the audit findings.
You can help the tax audit process go more smoothly by gathering all the necessary documents beforehand and acting courteously and professionally when communicating with the IRS. You may handle the situation on your own, or have an authorized party (such as an attorney or CPA) represent you or accompany you in meetings with the IRS. While federal law allows any qualified representative, having a Georgia-based tax attorney or CPA can be beneficial if the audit involves state-specific tax credits or local business issues.