If you receive a notice of an IRS audit, you may feel overwhelmed. However, an experienced tax lawyer can help you navigate the auditing process, protect your financial resources, and give you peace of mind.
What Is a Tax Audit?
When the IRS performs an audit, it investigates your finances and income to determine whether you paid sufficient taxes. Some audits are in-person, but most are performed in writing. (The IRS will send you letters and expect a detailed response.) Depending on your case, the IRS may review your entire tax return or focus on one specific part of your filing. Frequently, an audit involves the submission of extensive information documenting your income and deductions.
Why Am I Being Audited?
Even if you are honest and pay your taxes on time, you may be audited. However, the following circumstances increase the likelihood of an IRS audit. You:
- Are self-employed,
- Have experienced a dramatic decrease in your earnings,
- Failed to file a tax form (such as a W-2 or Form 1099),
- Claim a hobby is a business to write off expenses,
- Claim extensive food and entertainment expenses,
- Deduct a home office or vehicle-related expenses,
- Make generous charitable donations,
- Made mathematical errors on your return, or
- Have overseas or offshore bank accounts.
Other times, you may undergo an audit because of informant reports or other factors.
What Records Will the IRS Request During an Audit?
Every IRS audit is different. Depending on the scope of its audit, the IRS may request some or all of the following documents:
- Bills and proof of payments (such as canceled checks),
- Business travel logs,
- Paperwork from civil or criminal cases,
- Divorce settlements and child support orders,
- Employment documents,
- Evidence of your property acquisitions,
- Insurance claim information,
- Loan agreements,
- Medical records and associated bills,
- Receipts for business-related expenses, and
- Tax preparation documents.
The IRS also has a set of standardized questionnaires that you may receive.
While it’s best to keep detailed and organized records, it can be difficult to obtain all of this information. A tax lawyer can help you compile and organize your records, and ensure that you properly submit these documents within the IRS’ deadlines.
What Can I Do About an IRS Audit?
While you must take an IRS audit seriously, do not panic. Contact an experienced tax lawyer for help and make sure you (or your lawyer) respond to the IRS’ requests. And, if you need more time compiling your tax information, the IRS may give you an extension
Additionally, you have rights, including the rights to:
- Know why the IRS is requesting certain information,
- Know what the IRS will do with your information,
- Be informed of what will happen if you do not comply with an IRS request,
- Receive professional and courteous treatment from IRS agents,
- Privacy and confidentiality, and
- Legal or other representation.
If you are concerned that the IRS is violating your rights, contact a lawyer immediately. A lawyer can help you navigate the audit system and ensure that the investigation proceeds properly.
Additionally, you have appeal rights if you disagree with the IRS’ findings. Depending on your claim, you may participate in mediation or a formal appeal to the United States’ federal courts (including the Tax Court, District Court, Bankruptcy Court, or the Court of Federal Claims). If you qualify for a Fast Track Settlement, you may be able to resolve your audit dispute within as little as 60 days. If you need help formulating your appeal strategy, a tax lawyer can evaluate your claim and tailor a plan that meets your needs.
Speak With a Tax Lawyer About Your IRS Audit Today
IRS audits can be complex and time-intensive. Contact the Sodowsky Law Firm for a detailed and confidential evaluation of your situation. With over forty years of legal and business experience, we are able to guide you through the audit process, negotiate on your behalf, and ensure that the IRS complies with federal laws and regulations.