What Happens During An IRS Audit?

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You’re getting ready to face your worst nightmare and you need help. You are not alone. Many people become anxious and confused when facing an IRS audit.

If an IRS audit happens to you we have the IRS information you need to make the IRS audit as painless as possible.

Believe it or not, the IRS has procedures and guidelines they must abide. We want to share this IRS audit criterion with you. So, you have the information you need and are able to plan your next step.

Don’t take part in an IRS audit without legal representation. We have the experience and know how to challenge the IRS. We also have a stellar reputation in representing our clients and getting them the best IRS settlement possible.

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What Happens When the IRS Audits You?

The only way the IRS ever notifies people that they are being audited is by postal mail. This will be the first indication you are facing an upcoming IRS audit.   

The IRS will never tell you that you are being audited by telephone or email. Once you receive notification of the IRS audit they will provide you with a list of information needed.

This may make you fearful and while it is mandatory it can be done with little to no pain. 

We understand during the initial stages of an IRS audit, you think it is a huge ordeal. But you should know 75% of IRS tax audits are what we call correspondence audits.

A correspondence audit is when the IRS has questions about your tax return. This is when you need a good tax attorney.

The documentation the IRS requests you submit by mail and in some cases, the IRS matter closes with no further action needed.

This is helpful to know because not every IRS audit requires you to meet an IRS auditing representative in-person.

Many times you never have a face-to-face meeting. Regardless, it is important to seek tax advice from an attorney who is skilled, experienced, and ready to develop an IRS audit plan-of-action.

This IRS audit plan of action will help you challenge the IRS audit and limit your IRS tax exposure. 

There should not be anything left to chance in an IRS audit. Which is why it is so vital to seek an experienced and skilled tax attorney.

Leaving anything to chance with an IRS audit leads to a risky path which doesn’t end well most of the time for the audited person.

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Which Type of Audit Occurs at Your Home or Business?

You are now dealing with the IRS and they are doing a full audit and will be coming to your home or business.

One of the first things the IRS will request in an IRS audit is the receipts. These receipts need to back up the numbers you inputted into your personal or business tax return.

In-Office Tax Audit

In an in-office tax audit, the IRS will have an IRS tax auditor attend a meeting with you. 

The IRS will request specific documentation from you. You must have this information ready for the meeting. 

It is at this time we recommend you bring a tax attorney with you for representation purposes. You are opening a door with the IRS if you are not legally represented.

Many times someone says something to the IRS they cannot take back or gives information which was not requested. This opens a Pandora’s box with the IRS.

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Being Audited by the IRS and No Receipts

Field Audits

If you filed a tax return without any back-up documentation or receipts sometimes the IRS will do a field audit.

If the IRS requests a field audit an IRS officer comes to your home or place of business.

During the visit, they conduct a very detailed and in-depth review of your tax return. This includes any information you have backing-up your tax return figures.

The IRS won’t do a field audit unless there are some major issues or questions in which they need further details.

We always recommend a tax attorney be with you in your home or business during a field audit by the IRS.

Sometimes it is good to think of covering yourself with protection during IRS tax audits. You can never have too much protective layering when dealing with the IRS.

It is like when legal defendants plead the 5th amendment in court cases. They do this because they do not want to give any incriminating information by accident which is not needed.

You do not want to give the IRS any incriminating statements or paperwork. Because they can and will use that against you if needed.

We tell people what really happens when you don’t pay your taxes, or you face a tax auditor with no receipts.

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What Happens If I Get Audited?

There are several reasons you may get audited. Sometimes you made a mistake and didn’t pay enough in taxes. Sometimes you didn’t provide enough back-up documentation to support your figures.

Sometimes you didn’t pay your taxes at all. There are many reasons why you may get audited. We are here to tell you some circumstances which can result in getting an audit. Some of them are:

  • There are math errors in your calculations. Because of those math errors, an IRS red flag may be raised and you now owe fines.
  • You left out information the IRS knows should be listed. If you don’t report all your income the IRS knows you received, you now have their full attention.
  • Your charitable donations rival those of Bill Gates. You took too many and with too much monetary value. In fact, any deduction needs to be checked and verified. Then verify it again for good measure.
  • You reported a home office deduction. Reporting a home office deduction isn’t a problem unless some of the home office deductions are not allowed by the IRS.
  • You report monetary losses in your self-employment capacity. The losses are so large it makes no sense for you to keep working. The IRS is aware self-employment can have losses, but not so many you have no profit.

When You Have No Receipts 

If you are being audited and have no receipts there are several alternatives you can provide which can take the place of the receipts. They are;

  • Logs from a calendar or daily task list.
  • Canceled checks or online banking information proving each expense.
  • Credit and debit card statements.
  • Any travel and car recorded information.
  • Photographs of new purchases, equipment, services, etc.
  • Any emails which reference the deducted expense.
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What Happens When You Get Audited by the IRS?

We listed some of the things which can cause an audit. Now we are now going to give you information about what happens when you get audited.

We are also going over what you need during an IRS audit. We are also going to go over what outcomes arise from being audited.

This is vital information to know and go over with your tax attorney to create the best plan-of-action.

What Do You Need to Bring or Have with You for an IRS Audit?

It doesn’t matter if you are meeting the IRS agent in one of the IRS offices or at your place of business. 

You must be prepared. It is recommended you not meet with anyone from the IRS performing an audit without legal representation.

Once you attend the IRS audit meeting make sure you have all your relevant records and documentation. This is vital.

It is vital because without preparation and legal representation you are borrowing trouble you don’t need. The IRS is very specific and detailed about what they need and why. 

You need to be just as detailed and itemized in return. It is mandatory you bring the documents and information the IRS requests.

Understand that with the IRS it is always better to be safe than sorry. We work with our clients’ step by step and document by document in preparation of the IRS audit. 

It is important to give them exactly what they request. Do not supersede what information they requested with your own interpretation of the request.

If you do, you may be opening yourself up to a boatload of trouble. This trouble can result in a future and additional IRS audit. Bring only the back-up documentation requested by the IRS.

What Are IRS Statistics About Cases They Audit?

Understand that 90% of IRS audits result in changes on your return. At the end of the meeting, it is more than possible your tax return will need amending.

It is essential you have legal representation with you during this process to limit your IRS exposure with extra fees.

Also, at the end of the meeting, the IRS can determine they need nothing further. At this time they give you the proposed changes they want in your tax return. Or they may give you final approval for the return they audited.

It is at this point, you can consult with your attorney to determine if you want to agree or contest the IRS final determination.

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IRS Audit

Sometimes there is good news in an IRS audit. You find out you overpaid your taxes to the IRS. It is not unheard of although it is not the common result. But $1.4 billion IRS refunds were issued in 2015. Proving uncommon can occur.

There are hard and fast rules on what not to do during an IRS audit and we are providing the information here:

  • Do not argue with the IRS agent performing the audit. Do not argue with anyone in the IRS office on the phone, in person or by mail.
    • This is not the way to lessen your exposure in an IRS audit.
  • Do not try to explain or justify a false figure on your IRS return. It is a defensive move which can bring about other audits or criminal charges.
    • Let your attorney represent you in discussions and paperwork about your deductions.
  • The IRS audit is for determining if your tax return is valid and reliable. If you cause them more hours, extra effort or headaches the end result is not good.
    • Always be respectful and diligent in giving them the documentation requested. 

Criminal Investigation Audits

There is an IRS tax audit worse than all the others. It is the criminal investigation audit.

There is no doubt during a criminal investigation audit you need the best and most experienced tax attorney representation you can find.

We have extensive experience and a stellar reputation. We help people with IRS audits which have become criminal investigation audits.

When the IRS suspects you have evaded paying the taxes an IRS audit can result in a criminal investigation.

When you face a criminal investigation audit you are facing fines and prison time. 

Never assume you can handle the IRS criminal investigation audit without a skilled tax attorney. We are here to help you deal with one of the most powerful organizations in the United States.

We know how to challenge criminal investigation audits. Rather than being stressed or frightened let us help you handle the IRS criminal investigation audit.

We will walk you through the procedures and steps. We will go over the unknowns and what we need to do next together to fight you ever being charged with a crime.

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How Far Back Can the IRS Go to Audit My Return?

The IRS can go back many additional years if they flag you for an IRS audit. Although the IRS has policies which place the length of time in going back for audits around six-seven years. 

The rule of thumb for an IRS audit is most occur within two years of your filing your taxes. This is the usual amount of time they wait to perform IRS audits.

How Long Does an Audit Take?

An IRS audit can take days, weeks or months. You need to understand the more you work with the IRS in a proactive manner they better the results. It also lessens the time you are dealing with an IRS audit.

You do have rights if you are flagged for an IRS audit. These rights are in Publication 556 (09/2013), Examination of Returns, Appeal Rights, and Claims for Refund. They state;

  • You will receive professional and courteous treatment by IRS employees.
  • You have the right to privacy and confidentiality about your tax matters.
  • You have the right to know why the IRS is asking for information from you regarding your tax returns.
  • You have the right to know how the IRS will use that information.
  • You also have the right to know what will happen if you don’t provide the information. 
  • You have the right to legal representation.
  • You have the right to appeal disagreement with the IRS.
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What Happens When You Agree with the Audit Findings?

There are IRS audit cases which sometimes conclude with agreement by all parties. It is the result we strive for and want for our clients.

We are always one click or one phone call away from handling your fear of what to do next about your IRS audit.

We have IRS tax audit answers which help you plan a healthy future free of IRS audit fear.

Call us today. Don’t wait. Every day you wait is a day the IRS case can get stronger.

Managing Partner of Silver Tax Group, author of the book “Stop the IRS”. Practicing a variety of tax issues, regulations, laws and rights. Specializing exclusively on tax matters involving IRS audits, negotiation, settlements & compromises.

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