Solutions To IRS Tax Problems

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IRS Audit Tips

Tip For When You Receive an Audit Letter

Decide if you will be doing the audit yourself or hiring a CPA. One mistake people make is to assume that because you have all your receipts, read a tax guide, and used tax software, such as Turbo Tax or Tax Act, that the audit will go smoothly. Sorry, but the IRS is trained to intimidate people out of deductions. Another mistake is to assume that the person who prepared your returns is the correct person to represent you. Yes, they are familiar with you and your return. However, that is not a prerequisite for being good at audit representation. Consider hiring a reputable CPA firm with a lot of audit experience

If You Will Handle Your Own Audit…

You should attempt to schedule an appointment at the IRS office. Do not set up the appointment at your home or office. You do not want the auditor snooping around. Who knows what they will make out of what they see! You should attempt to schedule a date that allows you enough time to adequately prepare for the audit. This includes contacting third parties for invoices, receipts, schedules, notarized statements, etc.
Understand your rights beyond the Taxpayer Bill of Right. Research our website and others’ to understand the reasonableness of positions you want to take regarding you income and expenses.

Using the IRS Departments Available to You

Understand the audit report, how much time you have to respond, etc. Know about the audit manager and appeals. Understand the notice of delinquency and filing a tax court petition. Know when to file an appeal. A lot of this information is available on our website. You may want to sign up for our one hour consultations. We explain in a lot of detail, giving you confidence to handle your own audit. Of course we never recommend that you represent yourself in an audit unless you absolutely do not have the money to hire a CPA firm.

Never Go To an Audit Unprepared

There are guides you can buy that will help you prepare. I cant stress this enough. Auditors are trained to sway you to believe in their interpretations of the tax rules. Being prepared means you understand why you are entitled to your treatment of a tax issue, income, or expense item.

Expect to Owe Something

The IRS assumes that most people can’t support their tax return in the manner that the IRS requires. Sometimes we get “no change” audit results. Auditors usually like to look good to their manager. Managers require that audit work papers contain copies of support documents. When the auditor doesn’t have documentation to support their work papers, they will deny a deduction. You can beg all you want, but if they don’t think their manager will be happy, they will deny your deduction. Be prepared to give them some adjustments in their favor, or you are setting yourself up for disappointment.

Don’t Volunteer Information

Answer all questions with short, to the point answers. Long-winded explanations open the door for further questions. They also show your emotions. IRS employees are trained to use your emotions against you.

Don’t Bring Copies of Other Tax Years

The auditor is only supposed to audit what is in the audit letter. If they want to audit other years then they need to issue letters stating these years are under examination.

Best Audit Tip of All

Hire the most experienced, best qualified CPA firm you can find. Why? Because CPA’s are held to the highest professional standards. It’s extremely rare to find out that a state’s Attorney General’s office is going after a CPA firm. The State Board of Accountants will resolve fraud matters way beforehand! As for the T.V. hucksters and their many complains and Attorney General fines…Well, just do some diligent research and you’ll see.