It happens randomly, but being notified that you are being audited by the IRS can be anxiety-inducing nonetheless. It is even more daunting if you have had trouble with your taxes or finances in the past. The good news is that there are certain steps you can take to better cope with your situation. Here is what you need to do if you are being audited by the IRS.
Once the audit is complete, you will be given the IRS Form 4549 either by hand or mail. This form is the IRS examination report that shows the proposed adjustments to tax liability. If there are no changes, it means that you have won and could be owed a refund. On the other hand, if the report shows that you owe more taxes, the changes will be adjusted accordingly and you may incur additional penalties and interest. In this case, you have two options: either approve or disapprove of the IRS findings.
If You Approve of the Audit Report
If you do not object to the proposed changes, you should sign the report to indicate your approval. You should also sign IRS Form 870, which is the Consent to Proposed Tax Adjustments, and then return it to the IRS along with a copy of the signed report. This typically means that you agree that you have a tax deficit and are liable for the additional interest and penalties listed on the report. The next step is to establish a payment plan, which will largely depend on the amount you owe.
If You Disapprove of the Audit Report
If you do not agree with the IRS examination report, you can take any of the following actions within 30 days:
- Take your case to the group or senior manager
- Request to discuss the report with the examiner
- Submit additional documents for consideration
- Request an appeal
You need to provide honest answers to the questions you are asked by the IRS. If the revenue agent gets a hint that you are hiding something, they will drag out the process to get the truth. However, you are under no obligation to share any details that have not been specifically asked. Just stay on topic and provide the required information, and nothing else.
Having copies of all of your financial documents is essential to the examination process. It will ensure that you have strong, matching records to compare to as you work with the IRS agent conducting the audit. However, be careful not to give out your original documents as they may get lost in the possession of the IRS.
An IRS audit involves several different parts, deadlines, notices, and personnel. You need to be aware of all these aspects during the examination. You may also want to hire a financial advisor to help you with your taxes. Make sure that the financial expert has an audit protection program and can stand by their filed return.
If you believe that there is a complication in your tax returns, attorney Tanika L. Finney can help you resolve the matter. However, it is important to respond to the audit report as quickly as possible or it will be difficult to rectify any mistakes. Get in touch today at 334-246-4170.