How to Prepare for an IRS Tax Audit

As a business owner, you may be subjected to an IRS tax audit for various reasons. Being ‘red flagged’ or subject to an audit does not make you guilty. In most cases, the IRS may simply need further clarifications about specific deductions claimed or tax credits that you may have included in your tax returns.

Most often, there will be no cause for concern as long as you feel you have been honest when disclosing your income and filing your tax returns. For the most part, it would be prudent to be well prepared rather than worried of the outcome of the IRS tax audit states tax lawyers.

Your preparation can begin with gathering all the important documents which will include:

• Bank statements and financial statements for the audit year
• Receipts
• Invoices
• Printouts of electronic records
• Worksheets showing calculations for each items
• Documents the IRS may ask you to keep ready for the audit in their audit letter
• Tax returns for years prior to and years subsequent to the audit
• Payroll tax data
• Depreciation schedules

Read the IRS tax audit notification

Tax attorneys reiterate that having all the documentation ready is essential in order to substantiate your case. The IRS website contains a comprehensive list of records required and outlines the rights of taxpayers during an IRS audit in the IRS publication entitled "Taxpayers Bill of Rights". But if you are conservative and the year is 2011 and 2012, these bill of rights did not seem to mean too much with someone like Lois Lerner in charge. She turned this organization into a corrupt entity and made its name even more disreputable than it already is.

Determine your risks

Often times, it may turn out that when filing your business tax return you may have inadvertently not included a minor amount or detail. If it is only a couple of hundred dollars then there is no need to rush to hire any legal help but perhaps there could be a reason for this since a case could explode before you know it. However, if it is much more and you want to be on the safe side then you ought to seek the assistance of a tax professional or tax lawyer to represent you. Learn as much about the area on your tax return that has prompted the audit.

Create an audit team

You can be well prepared if you set up an audit team once you receive the IRS audit letter requesting a field audit. In this way, you will be able to collect the required documents and review tax records to assess if there are any compliance issues.

It is also essential to appoint a responsible person that will act as the contact person with the IRS during a field audit. His or her task would be to answer any questions the IRS agent may pose regarding your financial practices, preparation of tax returns, and your business overall. This could include your accountant or your business lawyer.

Submit only relevant and requested documents

If you are being audited for a specific area in your tax return then it is prudent and sagacious to submit relevant documents pertaining to the issue that raised the need for an audit. If you are well organized and stick to the point, you will definitely gain points with the auditor.

Once the IRS audit begins, make sure you remain calm and confident. Do not voice your disagreement in anger. Calmly state your case, since you have the right to appeal or even go to tax court if need be. Remember, it is your business that is at stake, so it may not matter that much in terms of dealing with an audit since it may not even cost you that much in the end. Most importantly, let your tax lawyer do as much of the talking as possible.

Not sure how to reach one? Cannot even get your printer to work since sometimes they do not work with certain laptops and so on? Trying to coach your son’s Little League team too? Your dog needs to go to the vet as well. Your plate is full, we get it. This is why this site was invented: Tax.USAttorneys. Your task of finding legal help just became 10 times easier. The bureaucrats love a complicated tax code and look at time in a completely different manner, the private sector is the epitome of simplicity. This site is easy to use since we know that your time is precious and valuable. Politicians do not always get it – we do!