Taxpayers submit tax returns each year to their state and federal Internal Revenue Service. When completing their tax returns, the taxpayer must complete accurate calculations and avoid mistakes. If they are unfamiliar with tax laws, taxpayers could allow a tax prepare or accountant to complete their tax returns for them. If there are any mistakes or suspected mistakes on any tax return, the IRS could start a tax audit for the tax year. The audit requires the taxpayer to submit additional records along with a copy of their tax returns. The taxpayers receive a notification from the IRS when they are getting audited. Taxpayers could review tax audit proceedings and learn what to expect.
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How Can the Taxpayer Handle the Audit?
Taxpayers must respond to their notification from the Internal Revenue Service quickly. They have up to 30 days to respond, but it’s imperative to manage the task as quickly as possible. The taxpayer has the option to respond via mail, contact an attorney to prepare them before they respond, or hire an attorney to speak to the IRS on their behalf. The taxpayer could manage the audit via the mail or set up an in-person interview. An attorney could help the taxpayer review their IRS letter and determine the most suitable action. Information about local tax attorneys is available at sambrotman.com today.
Find and Submit the Records Requested
Taxpayers must review their tax returns for the year or years listed by the IRS, and they must submit these records to the IRS for the tax audit. They attach any receipts for expenses to the copies of the tax returns. When completing the audit, the IRS needs conclusive records for all deductions for their assessment. The purpose of the tax audit is to ensure that the taxpayer calculated their records properly, and they paid all that they owed the IRS each tax season.
When It Comes to IRS Tax Questions
The IRS asks the taxpayer a series of questions about their tax returns and how they use their earnings. Taxpayers must answer the questions that the IRS asks them only, and the taxpayer shouldn’t volunteer information that doesn’t pertain to the requested tax returns. If the individual keeps accurate records, they can send the copies to the IRS to answer these questions. However, if they choose to mail in the information, the taxpayer will need to provide responses to the answers. If the taxpayer is unsure about how to answer the questions, their attorney could provide help or answer the questions for the taxpayer.
Do Not Start a Fight With the IRS
It is too easy for a taxpayer to become emotional about the tax audit, and they could act out of character. Attorneys advise taxpayers to stay calm and avoid getting angry with the auditor. The IRS auditor is just doing their job, and if the taxpayer is rude or inappropriate, there could be consequences. The taxpayer must respond to questions or inquiries in a respectful manner, and they should avoid conflicts or confrontations. If they need to fight to IRS, it is more suitable for the taxpayer to allow their attorney to manage the battle for them.
The Findings of the Audit
The IRS reports their findings to the taxpayer or to their attorney. They must follow the instructions provided by the IRS auditor. If they do not agree with the IRS’s decision, their attorney helps them rectify the situation with evidence that contradicts the auditor’s findings or decision. Typically, the auditors inform the taxpayer if there were any discrepancies on the tax returns, and they explain how much money the taxpayer owes the IRS. Unless the IRS is pressing criminal charges, the taxpayer will need to submit payments to the IRS as directed. If there are criminal charges, the individual needs their attorney to help them build an effective defense. Tax evasion and tax fraud are common crimes imposed by the IRS.
Setting Up Payments for Any Overdue Taxes
The taxpayer has several options for managing their overdue tax payments. Their attorney could discuss the matter with the IRS and set up an installment plan. After a tax audit, the IRS presents the taxpayer with an exact calculation for the outstanding tax payments. If the tax payment is higher-than-average, the attorney could try to get the IRS to accept payments instead of a lump sum. However, the taxpayer must fulfill all payments once they implement the installment plan. If they do not, the IRS could take further action against the taxpayer.
Taking Action Against the Findings
When a taxpayer doesn’t agree with the IRS auditor’s decision, they may dispute the findings. They submit a request for the dispute, and the IRS sets up a new appointment with a manager or supervisor from the IRS. The taxpayer needs legal counsel to guide them through the dispute. The attorney will know what the IRS expects and what evidence the taxpayer needs to substantiate their claim. They conduct a new assessment at the IRS office or the taxpayer’s home. The attorney coordinates these arrangements with the IRS manager.
The new in-person interview may require the taxpayer to provide additional tax returns when necessary. The taxpayer should contact their accountant or review their tax records for returns for the last 10 years. They will need all receipts for each tax return, and any additional records related to the tax returns.
Taxpayers could become the subject of a tax audit for many reasons. There are different factors that could trigger an audit and require the taxpayer to provide tax returns and related records to the IRS. When the IRS starts an audit, notify the taxpayer via mail and list any tax returns the agency requires for the audit. An attorney could help the taxpayer with the audit and make all IRS questions for them. Taxpayers can complete audits via mail or in-person interview. It’s vital for taxpayers to respond to the audit quickly and avoid potential repercussions of failing to respond.