What You Should Know About Getting Audited

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Finding out that you are getting audited is never pleasant news. For those who have never been audited, it is an examination performed by an IRS agent of an individual's tax return, in order to verify its accuracy. The seriousness/nature of an audit can be determined by the type of audit performed. There are three types of audits performed by the IRS.

When the IRS mails a request for additional information it is referred to as a correspondence audit. Office audits require that the individual visit the local IRS office for an interview. Field audits take place at the taxpayer's place of business, in order to perform a corporate tax return. It is always a good idea to keep precise records to support the information you provided on your return. Remember, the burden of proof is on the taxpayer, not the IRS.

It is important to be prepared this year, because audits are on the rise. This should come as no surprise, since audits have increased every year in the past ten years. However, the chances of being audited are still slim. If you make under $200,000 each year you have only a 1% chance. The percentage only increases to 2% if your income is between $200,000 and $1 million. The civilians most likely to get audited are those who are self-employed or have an unusual amount of write-offs. Note that it takes 18 months after you file your taxes for you to receive an audit notice. So if you do get audited this year, it is probably for the taxes you filed in 2008.

Make sure to respond to your notice within 30 days, or you could give up your right to dispute charges. After 30 days the dispute becomes a final assessment, and the collections department will be notified. If you aren't ready to respond to the audit in 30 days, you have the option to apply for postponement. Notifying the IRS that you need time to get your records in order will usually grant you some time. If your audit requires an office visit, consider investing in a CPA with audit experience. You could pay anywhere from $500 to a few thousand, but it might be worth it.

When being audited, only provide information that is asked of you. Anything you say can, and probably will, be used against you in a court of law. Talking can have you unknowingly giving evidence that could do you in. Even small talk is dangerous in a face to face interview with an IRS agent. If you hire representation, you won’t be asked to attend the meeting and can avoid giving out incriminating information.

If you do not like the findings of a field agent, you can request to speak to their superior. If you are still unhappy with the result, you can file an appeal. The IRS will consider the hazards of going into litigation with you. If they find that there is a good chance they could lose in court, they can decide to offer a deal instead. Your last option is to take it to court, but that can cost thousands and tons of time you might not have to waste.