It is perfectly understandable that you might be more than little fearful at the prospect of coming under the spotlight when the IRS contact you to conduct an audit but even when there is a sense of urgency to respond it is always best to try and keep a clear head and don’t panic.
A good way of helping you to deal with the situation in the best way possible would be to consider using a tax attorney to help you respond to the IRS audit questions in the right way, and there are other points to consider in this situation too.
Don’t assume the worst
A fundamental point that you need to keep in mind when facing up to the prospect of a dreaded IRS audit is the fact that you should not take the negative view that the tax authorities believe you have done something wrong.
An audit is a basic process carried out by the IRS and the starting point is always that they are seeking clarification of certain aspects of your tax return rather than pointing the finger of suspicion at you and suggesting you have carried out some sort of criminal act.
You need to understand that taxpayers are randomly selected, albeit using a statistical formula that highlights potential issues, and the process could be over very quickly if you are able to answer the questions raised quickly and accurately.
Different levels of severity
It is also highly relevant to appreciate that there are three distinct types of audits, ranging in severity.
A mail audit is the lowest-ranked investigation in terms of severity and this is normally a case of clarifying some routine errors. The vast majority of audits fall into this category and if your paperwork is up to date you should be able to answer the questions without having too much to fear.
An office examination audit will involve you being asked to put in an appearance at your local IRS branch to answer some questions about your reported income and deductions.
A field audit is the most extensive of the three and this will involve an IRS agent visiting you to ask a series of questions and examine your records.
Even if your audit falls into a more severe category you should still aim to keep calm and maybe consider getting some professional guidance to help you through the process.
You have rights
Finally, you should also be mindful that the IRS has a duty of care to treat you fairly and follow the rules of engagement when selecting you for an audit.
This means that you also have the right to appeal their decision if you think that it is unfair or wrong and you should bear in mind that you do have the right to use an authorized representative if you don’t want to deal with the situation on your own.
There are consequences attached to being audited by the IRS but only if you have not declared the right income or withheld certain information.
However, it never pays to panic when under the tax spotlight, and seeking professional help is never a bad idea, given the circumstances.