If the Internal Revenue Service (IRS) has notified you that it will be auditing one or more of your income tax returns, you should prepare yourself for the likelihood that you will owe additional tax as a result of the audit. Although the IRS now audits fewer tax returns, only about 25% of taxpayers who are audited escape without paying any additional tax. Therefore, if you have been selected for a tax audit, you immediately should contact an experienced tax attorney for assistance with the audit process.
Beating a Tax Audit
There are several steps that you can take in order to better your chances of winning a tax audit. First, do not file your most recent income tax return while you are in the process of being audited for past tax returns. If you do so, you run the risk of having the audit expanded to cover an additional tax year. Therefore, you should file for an automatic extension with the IRS no later than April 15th, which will give you until October 15th to file your tax return. However, you should be sure to pay any tax that is due and owing by April 15th, even though you have not filed your tax return; this will allow you to avoid any interest and/or penalties that you might incur if you failed to pay the tax owed by April 15th.
Next, you should make every effort to cooperate and work with your tax auditor in a positive manner. If you may the auditor’s job more difficult by refusing to produce certain documentation or delaying the audit in some way, you are likely to make the auditor unhappy, which may result in an audit report that is favorable to you.
Finally, if you don’t hear anything regarding your tax audit for a substantial period of time, don’t take any action to remind your auditor of the audit. Tax audits must be completed within twenty-eight (28) months of the tax return’s filing date or the date on which it was due, but audits often are completed prior to that time. Not hearing from your auditor for awhile can actually work in your favor. If your auditor leaves the IRS, for example, you may be assigned to a new auditor who must quickly resolve your case. Likewise, if the audit goes on long enough, the time for completing the audit might actually expire, which is also to your benefit.
Legal Help with Your Tax Audit
Working with your tax preparer and/or an experienced tax attorney can make your chances of winning your tax audit must greater. These professionals will be able to present your tax return, and the choices that you made on that return, in the best light possible, as well as directly communicate with the auditor in order to resolve the audit. Additionally, you can receive practical advice from seasoned professionals as to how best to survive an audit, and minimize your exposure to additional taxes assessed by the IRS.
