If you want to know what to do and how to prepare for an audit keep reading…
If you are one of the unlucky few who are chosen for a tax audit, you need to be prepared. Your first step should be to take a good look at the details of your return to refresh your memory. Once you have a thorough understanding of the contents of your tax return, you need to organize your records to support the items questioned by the IRS. Prior to the actual examination, you should establish a range of settlements that you are comfortable accepting. This will prepare you for possible settlement terms that might be discussed later by the examiner.
If you feel that the matters being questioned or disputed by the IRS are over your head, you should seek the assistance of a professional such as a certified public accountant (CPA) or an attorney. If you decide to attend the examination, take ONLY the records related to the items in the IRS Notice of Audit – DO NOT volunteer extra records, since you may end up subjecting yourself to a new investigation. If the examiner happens to question you on an item not mentioned in the IRS notice, you should refuse in a polite but firm manner until they file a formal request for this information.
If the audit occurs in your place of business, all employees should be instructed NOT TO TALK about the business or the audit with the IRS agent. Inquiries from the IRS agent should be referred to you. Finally, 10 days prior to the interview, you should give the IRS written notice that you will be making an audio recording of the interview with the IRS agent. Video recordings are not allowed.