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What You Need To Know If You're Getting Audited
Experienced tax attorney Scott Kauffman explains what you need to know if you are being audited.
November 16, 2011 /Personal Finance PR News/ -- The good news is that the IRS is making the process less time-consuming. The bad news is that the IRS is making the process less time-consuming. Over 80% of the audits are going to be conducted by correspondence exams. Because they are far less time consuming, the IRS can audit more taxpayers, but if a taxpayer isn't careful, the audit can become a nightmare.
What do you need to know?
Most Audits are Targeted. The IRS has largely abandoned the old line-by-line audits and is more likely to focus on a single subject or two that appears to be a hotbed of cheating, such as auto donations. With a targeted audit, you are likely to be asked to provide more information only about a few items on your return. If you have the documents to clearly show your deduction was legitimate, you may be able to handle the audit simply by making a copy of your records and mailing them in. Make sure to answer promptly and send your information by certified mail.
Quicker Challenges.
If the agent who reviews your correspondence does not like what he sees, you could be on your way to Tax Court. With in person audits, there are a variety of appeals before a formal challenge. Options. You can request that a correspondence audit be transferred to a face-to-face auditor. For example, if you are being audited over business expenses, you might need to explain why an unusual expense was reasonable and customary in your line of work, which is easier to do in person than on paper.
Do Your Homework.
The IRS is an open book in that it publishes its procedures, rules and taxpayer rights. Rein in Emotions; Take Notes. If you end up in a face-to-face, be calm, polite, respectful and take detailed, copious notes. There are lots of judgment calls in the typical audit, and the auditor's impression of you can help determine whether you receive the benefit of the doubt. If you are aggressive or panicky, the auditor is going to guess you have something to hide. Hire a Professional. The Tax Code is complex and audits are frightening and unfamiliar. Unless your audit is incredibly simple or involves a small amount of money, you would be wise to hire a professional.
Website: http://www.besttaxadvocate.com
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