Receiving a notice from the IRS that you or your company is being audited can invoke fear in even the calmest, most organized individuals. While the IRS audits on average less than 1% of taxpayers each year, it does happen, and your deliberate response to that alarming correspondence is essential.
You've received notice that you're being audited, now what?
1. Seek representation. It is essential to hire a tax professional to represent you. This may be your one and only audit (hopefully), but a professional has appeared before taxing authorities innumerable times and is well versed in the procedures and knows how to limit tax liability. At Koerner & Associates, we have represented hundreds of individuals and businesses in relation to IRS and state tax audits. The difference between attempting to proceed solo versus with the aid of a professional is thousands of dollars.
2. Follow their advice. A professional is there to coach you throughout the process. It may be frustrating at times, but following their strict advice is essential. We often prefer our clients not to attend meetings past the initial. It is for your protection and benefit.
3. Recognize what they’re asking for. The IRS or state taxing authority auditing you or your business will tell you exactly what they’re looking for. Begin to collect documentation only in relation to what they are seeking - ie. if they want gas expenses, supply gas expenses.
4. Get organized. Organize documents asked for by category and date. Give yourself ample time for this step as it often takes far more time than anticipated. Consider implementing a new process to become more organized with your expenses moving forward.
An audit, while always time-consuming and stressful, doesn't have to be a complete catastrophe. At Koerner & Associates, we are adept at representing audited clients and are available to provide guidance and representation to avoid tax liability. Contact us today!