What to Know Before the Audit
The best time to prepare for an IRS individual or business return audit is not once you've been notified that your return has been selected for audit but is instead when you are preparing your tax return. That is, you should keep in mind while preparing your return the potential for an audit and preserve the documentation that may be required to support your tax return. The modest amount of extra effort now while the information is fresh could prove very beneficial rather than scrambling to find necessary information once when you're under the time constraints or pressure of responding to an IRS request for records.
All tax returns are compared with statistical norms for similar returns, so large differences in normal expenditures may stand out even though they may be allowable and easy to support in your situation. In addition, each year, it seems the IRS adds new questions and disclosures to tax returns. These automated processes make it easier for more scrutiny of your returns which could lead to being selected for audit.
The benefit to being “audit ready” is that you can quickly and efficiently respond to the examiner’s questions and minimize the cost, disruption and stress caused by an audit. Ideally, you should also have one contact person (preferably your attorney or tax advisor) who interacts with the IRS on your behalf and who is familiar with your tax filings and records.
The IRS requires that you retain the records used to prepare your returns, and those records generally should be kept for 3 years from the date the tax return was filed. (For additional information, go to www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/How-long-should-I-keep-records.) The IRS does accept some electronic records and may request those (if you maintain your records electronically) in lieu of or in addition to other types of records with their written request.
Please contact us if you need assistance with being “audit ready” or have received a notice that your individual or business return has been selected for audit. In addition, we are experienced in assisting with non-filing situations and getting you back on track with your tax filing obligation. Contact us at (239) 595-5420 to schedule a consulation or click here to Email me.
The information contained herein is intended to be general in nature and is not meant to be relied upon as legal or tax advice. You should consult your legal or tax advisor for information specific to your circumstances.
