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Avoid these 5 common mistakes during a tax audit

| Jul 13, 2020 | Tax Law |

While a tax audit can seem daunting, cooperating with the IRS can help the process go as smoothly as possible. You should closely follow the instructions you receive on all official communications about your audit.

These five errors can prolong the process of your audit and potentially result in unwanted consequences.

Postponing IRS meetings

While most modern audits take place mostly to the mail, the IRS may require you to meet with an agent in person. In this case, the initial letter about your audit will give you a date and time for an in-person interview. The agency will hold the session at your CPA’s office, your home, your business or an IRS office in the area.

Although the IRS usually allows you to reschedule once, after a second no-show the agent will begin to access your records from other sources and audit the return without your input. You may also receive an administrative summons that will require an appearance in federal district court.

Being hostile toward the agent

The best approach when dealing with an IRS agent? Provide calm, honest, brief, polite answers to the questions he or she asks. Avoid hostility, which can escalate the situation and potentially indicate that you are hiding something. Giving too much information can also raise a red flag for the agent.

Failing to prepare

Whether your audit will take place in person or through the mail, you must provide the requested documents to the IRS. If you do not prepare these items, you may lose your chance to participate in the audit process. At the same time, do not send documents the agency did not request. Doing so can raise additional questions and prolong your audit.

Ignoring the required follow-up

The IRS will not go away if you ignore an audit letter. The sooner you take the required action, the sooner you will be able to resolve your tax issues.

Missing response deadlines

Like postponing a required meeting, failing to send in your documents by the deadline will have unwanted consequences. After a second missed deadline, the agent will take an alternative route to obtain your records and conduct the audit.

You have the right to legal representation throughout the audit process.