Many Americans live in fear of the dreaded Internal Revenue Service audit. Part of the reason Americans fear the audit, and the IRS
in general, is that they do not know what to expect during the audit process.
The first key is knowing that you probably never will be audited. Few Americans actually experience the audit process. You are much more likely if you own a small, unincorporated business, but even then the chances are very slim. In fact, Americans have a 95 percent chance of not being audited by the IRS.
Most people who are audited are able to settle the issue through the mail. The IRS will send paperwork that will ask for clarification or additional information. The package comes in a regular, unassuming enveloped. It does not scream, “you’re being audited” or “did you cheat on your taxes?”
For most people, the auditing process simply means filling out the paperwork and sending it in. If the IRS is happy at this point, your auditing experience is over. If they are not happy, however, they may request an audit meeting. An audit meeting really is not as scary as it sounds. You can request one as well if you want to meet to discuss the issues at hand.
You can have the audit meeting at your home, a local IRS office, or a neutral location. You and the auditor will discuss your taxes and the conflicts. You will be expected to provide documentation of the deductions you claimed on your taxes, for example.
After the audit meeting, the IRS representative will file a report with the IRS. You will receive the report, which will tell you whether they are adjusting your returns. Adjusting your returns usually means that you will owe more money. You will receive a letter in the mail to let you know about the audit results, and you have 30 days to appeal if you would like.
If you appeal the audit process’ determinations, then you will be assigned to an appeals supervisor. You and this supervisor will discuss your case, and you will be able to explain why you think the original auditor’s results were not correct. Defend your right not to pay more taxes here.
After this step, you will go back to the letter. The IRS will notify you of their findings, and you will have 90 days to sign their waiver and pay the additional taxes uncovered through the auditing process, or you can take the IRS to court.
Going to court means hiring a lawyer and presenting all of your documentation. This part of the auditing process is what terrifies people, but a very minute percentage ever get this far. Instead, endeavor to solve the tax dilemma in the first two steps so that you can go on with your life – with only a small horror story to tell about your IRS audit.