Usually people like to stand out in the crowd and be selected for something important or even win the lottery. However, when it comes to taxes and the IRS, people would prefer to keep a low profile, not be noticed, not be randomly selected or selectively chosen.
Even when your books are squeaky clean, an audit is looked upon with dread and apprehension. It takes away your time, you want to live in the now, you want the past to stay where it belongs – in the past. You don’t want have to dig up old files and dig in to the past when you’d rather use that time earning more money so you have more to give the IRS at a later date.
A few tax tips that are helpful if you do get an audit –
– Ensure your returns have been stored in a safe place, are accurate, neatly organized with all proper backup and support on tax positions. Then when they come to review your records and ask questions you have all the information and support at hand ready for them.
– Always be honest with your answers, and if you need help explaining some things you may want your CPA or a tax attorney present.
– Know your rights. Taxpayer-Bill-of-Rights Tax attorneys may tell you not to answer more than they ask. But the auditors will probably ask you if you’ve reviewed your taxes since you’ve learned of the audit and as a result of that review has anything come to your attention that was missing from your return or that would make your return inaccurate. So if you did find something and unless you are a skilled politician that can make the word ‘is’ mean something else you should just say what you know and be honest. Sometimes you might find small errors or omissions. They will make adjustments to your return and give you a bill for the difference. You may also find a deduction that you forgot to add, let them know that too.
I am not an attorney so I am just giving my opinion that it is best to just be honest. If you have something to hide you should seek legal counsel. The IRS doesn’t respond kindly to fraudulent returns. So prepare them as if you will be audited and keep your records clean. Clean as in accurate, a little coffee smudge on your papers will do no harm. Some short-sighted short cuts lead to the longest painful journey. On the other hand, don’t sell yourself short and be afraid to claim your deductions. Tax evasion is wrong. Tax avoidance (claiming your legitimate deductions to reduce your tax base) is good business. It keeps more money in your pocket so that you can expand your wealth so they can tax it again later. Did you know the federal government has collected $2.8 trillion in taxes over the 11 months of the fiscal year 2015, almost $200 billion than the year before.
– There have been many reports of scammers impersonating IRS officials. Always ensure the auditor is legit and you are being notified by a real IRS agent. You will first receive something in the mail from a local IRS office. They do not contact you by phone first. There must be an official letter sent to your address. If someone is calling you claiming to be the IRS insisting, harassing you give them your credit card number or payment, you are probably getting hustled by a scammer and should notify the real IRS. Do not give the scammer any personal information. Once an appointment is made after you respond to the letter, a real IRS agent will meet you and will have proper credentials on his or her person and can also be verified at the local tax agency.
Now that you have an idea of what to do if you are chosen for an audit and what to look out for to ensure you are not being scammed by an impersonator, click the link below for a video discussing your chances of getting an audit. Your chances are probably higher than winning the lottery.