Taking Care Of Accounting Issues

What You Should Know If You Are Audited By The IRS

Filing taxes is one of those things in the US that everyone has to do and nobody likes to do. It can be a tedious and frustrating process, even if you work with a tax preparation specialist to do your preparing and filing. And what can be even more disheartening is if you find yourself being audited by the IRS. An audit is essentially a step that the IRS can take to reevaluate your income and your deductions to assure that everything was reported accurately in your tax return. This can be a frustrating and unnerving event in any taxpayer's life. Get to know some of the facts you should be aware of when you are audited by the IRS. Then, you can be sure you handle the situation as well as possible. 

IRS Audits Are Usually Simple

The fact that you are audited does not automatically mean that the IRS is out to get you. They do not necessarily "have dirt" on you or believe that you blatantly lied on your tax return. The reality of an audit is that the IRS simply wants to ask you some questions about your tax return. 

Most tax audits are basic and simple issues. For example, you may not have had records of a debt being written off by a collection agent when you filed your taxes. This means that you accidentally did not report that debt cancellation in your income on your tax return. All that needs to be done in this case is for you to tell the IRS that you agree the debt cancellation is legitimate and pay any taxes due because of that issue. 

A tax audit could occur because you accidentally inverted two numbers on your wages, income, or any other simple mistake that anyone, even a professional tax preparation service, could make. Just answer the IRS's questions honestly, and you will likely resolve the issue right away.  

You Have a Right to Representation

If your IRS audit is more complicated than a simple issue or the IRS requests in-person interviews with you, it is important to know that you do not have to go it alone. You have a right to representation as you go through the audit process. This is also true even if the issue is simple and you just want to cover your bases. 

Representation in front of the IRS can take many forms. If you worked with a tax preparer or CPA for your tax return, they can likely represent you. The only exception is tax preparers that are not credentialed and did not voluntarily join the IRS's Annual Filing Season Program. If they are a part of that program, they can represent you in a limited capacity. 

Limited representation means that the tax preparer can represent you in front of the IRS through the initial audit process. However, if you go on to appeal the decision of the IRS, they can no longer be involved. 

There are agents that have an unlimited ability to represent you in an IRS audit. These people are all credentialed tax professionals and include CPAs (even if they did not file your return), enrolled agents (tax preparation specialists who have been tested and certified by the IRS), and tax attorneys. With the options of limited and unlimited representation when you are audited, the good news is that you never have to go it alone if you do not want to. 

Knowing the basics about what will happen when you are audited for the IRS should set your mind at ease and allow you to approach the situation calmly and rationally. And don't forget to obtain IRS representation services if you want to feel even more comfortable throughout the audit process.