Audits can be initiated for a variety of reasons. Whether you’ve been selected via random selection, the IRS’s internal computer program has determined that your taxes fall outside of predetermined “norms,” or your return is involved with someone else’s audit, such as a business partner or investor.
But what’s next?
What kind of things can you expect when you have been selected for audit by the IRS? Are there any ways you can properly prepare yourself if a situation like this occurs to you? Are you going to be given time to prepare? Just how far back do they go in your tax return history? Is it going to take forever? After an audit has taken place, what can I do about it?
What Are the First Steps of the Audit Process?
First, you need to know that the IRS only notifies individuals that they are being audited via mail. Phone calls that state you are being audited are likely scams.
Once you’ve received notification, an IRS examiner will review your records by mail or in person. The original notification letter will request if there is any additional information needed regarding certain items on tax returns. If your books are difficult to mail, you can request an in-person audit.
The IRS will request specific documents that you may need to provide. Some of the more common requests are:
- Loan agreements
- Medical records
- Employment documents.
What If I Need More Time to Provide the IRS With What They Requested?
You may be a busy person; people tend to be pretty busy now. Possibly, you’re unable to find all of your records; that may even be why you are being audited in the first place. There are a couple of simple things you can do to request more time.
If your audit is being conducted in person, it’s pretty simple to just give the auditor that is assigned to your case a phone call to request an extension. You may contact their manager if necessary. If your audit is being conducted by mail, you can fax a written request to the IRS or mail your request to the address on your letter. If there are no mitigating circumstances, the IRS can grant one 30-day extension. However, the IRS cannot petition the U.S. Tax Court beyond the 90-day period you’ve been given for your audit.
When the Audit is Concluded, What Happens? What Are My Rights?
An audit can vary in length and complexity. From scheduling conflicts to the amount of information requested, there is no sure way to define the average length of an audit. When it does conclude, you may agree or disagree with the findings, or there will be no change.
If you agree with what the examiner found, you will sign the examination report and pay back any owed money if necessary.
If you disagree, you can request a conference with an IRS manager, request mediation, or file an appeal–if there is time remaining on the statute of limitations.
Being audited is scary. However, it is important to know your rights. Federal law gives you the right to:
- Professional treatment by the IRS employees
- Privacy and confidentiality
- Understand why the information is being asked for and how it will be used
- Representation, by oneself or an authorized representative
- Appeal within the IRS and before the courts.