Surviving an Internal Revenue Service (IRS) Audit: A Comprehensive Guide to Navigating the Process with Confidence
Receiving notice of an IRS audit can be a daunting experience. It can cause confusion and uncertainty about what to expect during the process. However, with the help of a trusted and experienced tax professional like Denson & Co., LLC, you can navigate the audit process with confidence and ease.
At Denson & Co., LLC, we substantially understand our client’s wants and needs, which is why we offer comprehensive audit representation services to help you through this difficult time. Our team of tax professionals has broad experience dealing with IRS audits and will work tirelessly to ensure that your audit is handled efficiently and effectively.
What is Internal Revenue Service or IRS Audit?
An IRS audit reviews taxpayers’ financial information and tax returns to determine if they have been reported accurately. The audit process can vary in complexity and scope, depending on the type of audit conducted.
The IRS selects tax returns for audit based on various factors, including random selection, computer screening, and information received from third-party sources. They may also ask questions about specific items on the tax return, such as deductions or credits. Taxpayers need to be honest and provide accurate information during the audit process.
What are the Three Types of IRS Audits?
According to the Internal Revenue (IRS) official government website, there are three types of IRS Audits. These are Correspondence Audit, Office Audit, and Field Audit.
1. Correspondence Audit
This is the simplest and most common type of audit. It is conducted by mail, and the IRS will request further documentation or details from the taxpayer to clarify specific items on their tax return.
2. Office Audit
This type of audit is more comprehensive than correspondence and is conducted at an IRS office. The taxpayer will be asked to bring their financial records and other supporting documentation for the IRS agent to review.
3. Field Audit
This is the most complex type of audit and is conducted in person by an IRS agent at the taxpayer’s home or place of business. The IRS agent will review the taxpayer’s financial records and documentation in person and may conduct interviews to clarify any issues that arise during the audit.
What Takes Place During an Audit?
Based on the official website of the IRS, the following are the general steps that take place during an IRS audit:
The IRS will mail a notice of an audit to the taxpayer. The notice will provide information about the audit, including the type of audit, the items under review, and the date by which the requested information must be provided.
2. Gathering of tax payer’s information
The IRS will request documentation and other particulars from the taxpayer, such as bank statements, receipts, and invoices, to support the items under review. The taxpayer will also be asked to provide a copy of their tax return for the year in question.
The IRS will review the documents and information provided by the taxpayer to determine whether the items under review have been reported accurately.
The IRS will provide the taxpayer with a report of their findings. If any adjustments are needed, the taxpayer can agree or disagree with the proposed changes.
The taxpayer must sign an agreement form if they agree with the proposed changes. They may appeal the decision through the IRS appeals process or seek other legal remedies if they disagree.
It is significant to note that during an audit, the taxpayer has a list of rights, and we will tackle more about these privileges below.
What Rights Do You Have During an Audit?
During an IRS Audit, the taxpayers have the right to;
1. The right to professional and courteous treatment by IRS employees.
2. The right to know why the IRS is asking for information, how the information will be used, and what will happen if you do not provide the requested information.
3. The right to representation by a qualified tax professional, accountant, or legal advisor of your choice.
4. The right to appeal any IRS decisions that you disagree with.
5. The right to challenge the IRS in court if you believe your rights have been violated.
6. The right to privacy and confidentiality of your personal and financial information.
7. The right to be informed of the timeframe for completing the audit and any deadlines for responding to requests for information.
How Should You Prepare for an IRS Audit?
Preparing for an IRS audit can be a formidable task, but being organized and thorough can make the process smoother. Here are some steps you can take to prepare for an IRS audit:
1. Gather your records.
Collect all the necessary documents – financial records and supporting documents, such as receipts, invoices, bank statements, and tax returns, for the year being audited. Make sure that all records are accurate and complete.
2. Review your return.
Carefully review your tax return for the year being audited to ensure that all information is accurate and reported correctly. Compare the information on the return with your financial records to identify any discrepancies.
3. Read and understand the audit.
Read the audit notice and understand the type of audit being conducted, the specific items being reviewed, and the deadline for responding to the IRS.
4. Seek professional advice.
Consider hiring a qualified tax professional, such as a CPA or tax attorney, to represent you during the audit. They can provide guidance on how to respond to the IRS and can handle the audit on your behalf.
5. Respond in a timely manner.
Be sure to respond to all requests from the IRS within the designated time frame. Failure to respond or delays in responding can result in penalties and additional interest charges.
Ultimately, an IRS Audit can be stressful and complex, but taxpayers must understand their rights and be prepared. Remember, being organized and responsive can help make the audit process smoother and less burdensome.
Denson & Co., LLC Services
In addition to our audit representation services, we also offer a range of other tax services, including tax planning, preparation, and compliance services for businesses and individuals. Our goal is to provide our clients with the highest level of tax expertise and personalized service, helping them to achieve their financial goals and minimize their tax liabilities.
If you are facing an IRS audit or need assistance with any other tax-related matter, please get in touch with Denson & Co., LLC today to schedule a consultation. Our tax professionals are ready to assist you with all your tax needs and help you achieve the best possible outcome.
Why Businesses and Individuals Choose Us
Denson & Co., LLC is a reputable and well-respected consulting firm that provides various tax services. The firm is equipped with a group of proficient and experienced professionals who are capable of helping businesses regardless of their size.
These are the other excellent tax services of Denson & Co., LLC:
Contact us today to book an appointment. We’re glad to assist you!