AUDIT PREPARATION

Less than 2% out of the millions of tax returns filed each year are selected for audit. The IRS uses a complex computerized scoring system to make the initial selection of returns to audit, which is then reviewed by IRS personnel.

Usually, an audit is nothing more than a request for clarification or documentation. This is known as a "correspondence audit", and requires only an immediate response by mail. The two other forms of IRS audits--the "office interview" and the "field audit"--require some preparation.

To get through an audit quickly and painlessly, taxpayers should:

  • Be cooperative and business like.
  • Provide information requested promptly.
  • Never volunteer additional information.
  • Never discuss opinions about the IRS or taxes.
  • Never offer an auditor a "gift" of any kind.
If the return in question was properly prepared, there should be no need to pay additional taxes. However, the taxpayer should be flexible on this point since some points are not worth the time and money it would cost to contest them.

If the taxpayer does decide to appeal the decisions of an IRS auditor, the case may be settled in court. Additionally, it is recommended that a taxpayer employ professional assistance. It is comforting to have an expert as a representative and any accounting fees incurred are usually deductible on a later tax return.



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