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4 Tips for Preparing for an IRS Audit

9 November 2015

Don Elliott

Learning that you're about to be audited is certainly a frightening thing, but panicking won't help you. If you want to get through an audit, you need to be thoroughly prepared for it. Take a look at some tips that will help you get ready for the audit and achieve the best possible outcome.

Ask for Postponement

Time can be helpful when it comes to an audit. The more time that you have to prepare your documentation and go over the facts, the better off you'll be. Therefore, it's not a bad idea to start by asking to delay the audit.

You should always request a postponement in writing. If you're concerned that a letter won't reach the office in time, you can call the office where your audit is scheduled to ask for the postponement. But, you should send a letter as well, so that there is a record of your request. There isn't a maximum number of postponements you can ask for, but the IRS can refuse to grant them if they decide the postponement isn't necessary. However, you should be able to ask for at least one, so get the extra time and make sure to use it wisely.

Organize Your Documentation

You'll need to go back to the year being audited and gather all of your records and receipts for that year. If you didn't keep good records, don't panic. You can try to accurately recreate your records. Take a look at the copy of your return for the year in question so that you know exactly which income you reported and expenses you claimed.

You can call employers to request copies of W-2 or 1099 forms. Doctors and hospitals save medical records for several years, so you can request them if you've claimed medical expenses. Your mortgage company can give you documentation of your interest expenses for the year in question. You'll find that you can obtain copies of most or all of the information you need as long as you take the time to track it down. Once you have the information you need, organize it neatly in a file, and add a written summary.

Only Provide The Information You're Asked For

Meeting with an IRS auditor is something like being cross-examined in a courtroom. You want to be professional and honest, but you shouldn't give any information that you haven't been asked for. Don't bring documentation that you don't need, and only answer questions that you've been asked – don't explain or give extra information.

If the auditor needs additional documentation or an explanation, they'll be sure to let you know. In the meantime, however, saying more than you need to say or providing irrelevant documentation can open up a whole new line of inquiry. At best, this will make your audit more time-consuming and complicated. At worst, it will lead to the discovery of more money that you owe.

Bring a Tax Professional

One more thing that you should consider is hiring a tax attorney to help you with the audit. You absolutely need a tax attorney if the IRS is investigating possible criminal charges. However, even if it's not that serious, having a tax attorney to advise you can only help, and -- unlike a CPA -- with a tax attorney, you'll have attorney-client privilege. A CPA can be compelled to testify against you, if it comes to that, but this will not be an issue with a tax attorney.

Contact a tax attorney in your area, such as Wiesner & Frackowiak, LC, as soon as you receive notice of an audit. The sooner you begin preparing for the audit, the better off you'll be. 

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