How to Respond to an IRS Audit

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IRS audits are usually rare. Most of them are often received via mail. A complete, timely response is critical during such cases. This is the reason why you would require an experienced tax attorney to help you with your IRS audits.

Moreover, face-to-face IRS audits are seldomly seen. Before an IRS interview, you should always review your records in detail and prepare for an effective outcome.

Whenever the IRS agent presents any appeal, you need not abide by their decision. You, too, have the right to appeal.

If you are thinking about how to respond to an IRS audit, below-mentioned are some of how you can do so.




1. Understanding the scope of the tax audit

  • Mail audits are usually limited to a few items on the audit letter when you receive them from IRS.
  • Field and office audits require more work. You would need to gather the appropriate information and documents and prepare in-depth answers about your finances and activities.
  • When it comes to field and office audits, you should always get yourself an experienced attorney to help you with your case.

2. Prepare appropriate responses to IRS questions.

  • If you have received a mail audit, prepare a complete response to the items the IRS is questioning.
  • For field and office audits, prepare nicely for the meeting with the IRS officer. Prepare for all questions which are likely to be asked during the audit, such as unexplained bank deposits or additional income. The IRS agent is expected to ask you about your job, family, and any outside businesses. It would help if you were prepared about giving a detailed explanation of your entire year’s activities.
  • Suppose you don’t have the appropriate documents to prove your return. In that case, you might want to reconstruct it from third parties or other records.

3. Respond to IRS requests and advocate your tax return positions

  • If the IRS thinks that you have made adjustments to your records, they will ask you more questions. You will receive an information Document Request, which you need to attain by the deadline.
  • The IRS might disagree with you on various points, such as you took a deduction that wasn’t allowed or any other similar cases. If you disagree with such claims, ensure that you interpret the facts and tax law to the IRS.
  • Finally, IRS would close the tax audit, either proposing no changes or proposing adjustments to your return. You will receive a report with IRS findings a letter that allows you 30 days to appeal if you disagree. This letter is typically called a 30-day letter.

4.  If you disagree with the results, appeal with appropriate facts

  • Within 30 days of receiving the letter from the IRS, you can make your appeal to the IRS officials. After your 30-day time span is over, the IRS will send you a letter, called a Statutory Notice of Deficiency. This letter will close the tax audit and allow you to petition the U.S. Tax Court.
  • If you are receiving mail audits, remember that the letter proposing adjustments also serves as a 30-day letter. Taxpayers often overlook this letter and lose their ability to appeal.

Essential items to bring to your IRS audit

  1. A copy of your IRS audit letter
  2. Any documents that the IRS is requesting
  3. A copy of the tax return
  4. A copy of any documentation you gave to the tax preparer
  5. Any documents that show the results of your previous audits
  6. A copy of any other IRS letters that you have received

Wrapping it Up!

Here are the ways on how to respond to an IRS audit. Abide by the above points to ensure that your audit moves on without any hassle.