Getting audited is stressful enough without accidentally making the process harder on yourself. Some of the biggest IRS audit mistakes happen after the audit has already started and have nothing to do with why you’re being audited in the first place.
Don’t leave the IRS on read
Pretending like you didn’t see an audit notice works about as well as pretending you didn’t see that text you’ve been avoiding – and the IRS is less likely to take the hint.
Read the notice, figure out what the IRS wants, and circle the deadline with a red Sharpie. If you can’t get everything together in time, speak up. For audits by mail, the IRS will usually grant a one-time automatic 30-day extension if you ask, while in-person audits require you to contact your assigned auditor.
Just don’t assume that every deadline is negotiable. Some – like the deadline to petition the U.S. Tax Court after receiving a Notice of Deficiency – are set in stone, and missing it means the IRS can move forward with the information it already has.
Give them your records, not your life story
When the IRS asks for records, more isn’t always better. If your notice requires three specific records, stick to the assignment. Sending the last five years’ worth of receipts, bank statements, and whatever else you dig out of a filing cabinet isn’t doing you any favors.
If you’re responding by mail, include a copy of your audit notice with the requested records. And if you don’t know what the IRS wants, don’t turn it into a guessing game. Just ask.
Records in hand? Check. Now, see how to avoid fumbling the handoff.
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Don’t bury the evidence
You’ve got the records, so your next job is making sure the IRS can actually make sense of them.
Group your records by the issue they address, number the pages, and include a summary of what you’re sending. Sure, it may seem like overkill, but a little organization can help move the audit along and prevent misunderstandings later.
And this next part is important (so important that it’s an IRS recommendation). Keep all of the original documents. Only send copies to the IRS, as some documents will not be returned.
Your receipts need receipts
Don’t just keep track of the documents that you send the IRS. Keep track of actually sending them, too. Save a copy of everything you submit and make a note of when and how you responded. If you’re mailing documents, spring for the tracking so you have a record that they were delivered.
Simply dropping an envelope in the mail doesn’t mean your job is done. Document what you sent and when, hang onto the tracking information, and follow up with the IRS when needed.
Don’t sign first and ask questions later
When you’re audited by the IRS, one of the worst things you can do is simply agree to the changes just because the IRS says so, especially if you don’t understand what you’re agreeing to.
Ask questions and make sure you understand what’s happening before you sign anything. If you’re confused, uncomfortable handling the issue yourself, or things have gotten too complicated, it may be time to bring in a qualified tax professional.
If you do understand the IRS’s findings but you disagree, you also don’t have to accept the changes. There are options available to challenge or appeal the decision, so use them.
So, the process is simple: stay organized, give the IRS exactly what it asks for, and keep a record of everything you send. If something doesn’t make sense, ask questions or bring in a tax pro. You can’t stop the audit, but you can avoid making it worse.
