If you are being audited by the Internal Revenue Service, you may be wondering what to expect. An audit is an examination of your tax return by the Internal Revenue Service, or your state’s tax authority. While these audits are generally not threatening, they can be frustrating and costly. You can avoid being audited by following these tips. Read on to learn more. Here are some important facts you should know about income tax audits.
An audit can be either random or triggered by a specific issue or transaction with another taxpayer. An experienced auditor will review the return, and may accept it or note questionable items that require further investigation. An audit may also be performed on an amended return, although refunds are not necessarily a trigger for an audit. When you are being audited, it is best to seek legal representation to protect your rights. You should be aware that the tax department’s goal is to find out how the company pays its employees.
If you disagree with an audit result, you can appeal. You can appeal the audit decision within 60 days, but if the matter isn’t resolved, you have the right to file an appeal. You can also request a conference with the audit manager or mediate with the tax agency. You may even be able to appeal the decision, though this process can be lengthy and costly. If you feel that the audit is unfair, you can try appealing the decision.
An audit can be lengthy, but it’s important to remember that the IRS’s timetable varies. Generally, an audit takes six months to a year to complete. In the meantime, you’ll receive an assessment of your tax liability and have sixty days to appeal. The IRS will close the audit if they accept the information you submit. Once you receive your assessment, you’ll have the opportunity to appeal the findings. When you do this, you will have a better chance of avoiding a tax audit altogether.
Your CPA, tax attorney, or even your home may be visited by the IRS. The IRS may ask for documents related to the issue under examination. Additionally, they may also want to inspect your inventory records or observe your life in general. Don’t let your tax attorney or CPA tell you to lie in order to avoid an audit. They may be trying to find other reasons why you should be audited. When answering questions related to your business or your finances, be careful not to give the auditor reason to expand the scope of the audit.
If you’re facing an audit, it’s important to prepare as much as possible. The IRS is using computerized statistical protocols to detect reporting irregularities in tax returns. They use this software to flag certain returns and then decide whether to investigate them. If your return contains evidence of fraud, you should seek a lawyer. If you don’t, you may be subjected to criminal tax prosecution. However, it’s worth a try.
