How to Handle an Audit: 4 Great Tips

Most American tax payers never have to do deal with an audit by the Internal Revenue Service (IRS), but those who do shouldn’t be worried. An audit is not an accusation of wrongdoing or even an attempt to force you to pay additional taxes, only a request for more or clearer information. The majority of audits (around 75%) are conducted by mail-in forms, but whether your audit is remote or in person, there are plenty of things you can do to make sure you’re prepared.

1. Determine What You Need

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A notice of audit comes with requests for specific kinds of information. The IRS may request receipts to prove the value of any deductions you have made on your annual income tax forms, previous tax records or other documents that shed some light on your income. Before you go digging through all of your old financial information, read your audit notice carefully and feel free to contact the IRS if you have any questions at this stage.

2. Speak with Your Financial Representatives

Many people hire accountants, tax preparers, and other money experts to help handle their assets and organize their tax information. If you have worked with anyone in this capacity in the past year, whether a personal accountant at a small firm or an expert finance executive like Mark Weinberger, contact them to discuss what role they may take in the audit process. Some may request that you fill out Form 2848, a document that gives your representative the ability to speak on your behalf. For Form 2848, remember:

  • Make sure the contact info for your financial representatives is up-to-date
  • CAF NO is short for Centralized Authorization File Number, which all tax preparers have, likewise with the Preparer Tax Identification Number (PTIN)
  • Your audit notice should indicate which matters are being investigated

Even if you don’t need to fill out additional forms, these financial experts may have important advice about the audit process.

3. Choose the Right Meeting Space

If you are being audited in person, you have the right to choose where the meeting will take place. For your comfort and to minimize disruption to your routine, it is best to hold the meeting away from your home or place of business whenever possible.

  • Meet at your tax preparer’s office so you can have access to all relevant information
  • Meet at your attorney’s office to ensure total legal protection
  • Choose another neutral location that will be minimally disruptive to your schedule

4. Don’t Rush to Answer

If you don’t know the answer to a question during an in-person audit or you don’t feel prepared to present all necessary documentation by the deadline in a mail-in audit, you have the right to ask for more time. Likewise, you are under no obligation to provide more information than the IRS requests. Keeping things simple and timely will ensure that your audit is over as soon as possible.

Most of all, it’s important to remember that an IRS audit is just a double-check on the information you have already provided in your standard tax forms. This doesn’t mean you are being accused of anything or that you have made a mistake. In fact, if there’s a mistake it may not be on your end. If the IRS has an error in their own files, you may even receive a larger refund once your documents have been processed.