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First Steps to Take When Audited by the IRS

The IRS is one of the few governmental agencies that has the ability to make people freeze in terror – and for good reason. The IRS has the authority to garnish wages, levy fines, take money from your bank accounts, and confiscate your car, home and other personal property. When the IRS notifies you of an audit, there are specific steps to take.

Don’t Panic

Difficult as it may be, you need to remain calm if you’re to discover the extent and reason for the audit. It may be the result of an innocent mistake and easily rectified. The IRS notification will explain why you’re being audited.

It may not even be the result of an actual error. The IRS uses computer technology that screens and selects returns to be audited. They’re often chosen based on a statistical formula against what the IRS considers the “norm.”

People with incomes of 25,000 or less and those making $500,000 or more are the most likely to be audited. If the company you work for is audited, you might be, too.

The Process

Most IRS audits are conducted via mail and there’s no need to sit face-to-face with an auditor. However, if you receive a notice that you’re being audited, providing a timely response is critical. You should know that the IRS has up to three years in which it can start and conclude the audit process from one of your tax returns.

Hire a Professional

It’s an excellent idea to hire a tax professional that’s legally able to represent you in an audit. Collect all the documentation that you used to complete your return in the year for which you’re being audited. The more information you can provide to the tax professional, the better he/she can advocate for your interests.

Findings

You should know that if the auditor finds you at fault, you have the right to appeal within 30 days. The IRS will send a letter indicating the audit is closed, at which time you can appeal. Unfortunately, many people only see the decision rendered in the letter, not their ability to dispute the findings. You must appeal within 30 days of receiving the letter.

At Peavy and Associates PC our mission is to assist you with all your tax preparations, payroll and accounting needs.  We provide our clients with professional, personalized accounting services and guidance in a wide range of financial and business needs. Give us a call today and discover why our clients return to Peavy and Associates, PC year after year!

 

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Important Audit Advice

Oh no! You need audit advice. You just received in the mail a notification that you are going to be audited by the IRS. What now? How do you respond to this and should you be having a heart attack now? While many people lose it as soon as they realize that the IRS is going to be asking for their records and proof, the fact of the matter is that the best audit advice is to stay calm and gather the information that you need carefully, accurately and without worry. 

Make a Call

Before you put it to the side and decide to deal with it later, (it won’t go away by the way) take the time to respond to it. Give the IRS a call and find out what is going on and when they want to come and see your paperwork. This simple phone call can help you find the right information before you react the wrong way. Remember, it’s not the fault of the lady on the other side of the phone, that this is yours either. So, be nice, play fair and be honest. 

Need more Time?

Do you need some extra time to get your information in order? Need to dig out that box, organize it and hope that it’s all there? Then make sure to ask for a postponement of the audit. This audit advice is very important: don’t wait until the last minute to do it either! Call them up and ask for a small delay so that you can get things in order. Simple, done. 

Don’t Panic

Lastly, it is important to realize that most audits are simply needed because of minor errors. You added or subtracted wrong. You entered the wrong information on the wrong line. That type of thing occurs every day. This audit advice is to be honest about what is happening with you. So, you made a mistake. Fix it by providing a good attitude to the IRS auditor that comes to see you.

At Peavy and Associates PC our mission is to assist you with all your tax preparations, payroll and accounting needs.  We provide our clients with professional, personalized accounting services and guidance in a wide range of financial and business needs. Give us a call today and discover why our clients return to Peavy and Associates, PC year after year!

 

Contact Us Today

Read more