Business & Finance »
More Categories
Taxes »
More Categories
Tax Returns »
More Categories
- Tax Planning
- Taxes For Small Business

How To Survive a Tax Audit

Howcast Studios
Print
Easy Steps |

Vote! Was this useful? No Yes

+11

11 votes

1,197 views
So the IRS wants to have a little chat with you. Don’t make things worse by behaving stupidly at the audit.
Added April 3, 2008

Link

Embed Customize

This video has Easy Steps. | Show all steps » Print

You Will Need

Self-restraint
Good manners
A tax specialist or lawyer

Step 1.
Consider getting representation

Consider hiring someone to represent you at the audit. There’s a good chance the fee will be offset by the money a pro can save you.
Contact the National Association of Enrolled Agents for a tax pro; many are former <span class="caps">IRS</span> auditors.
Step 2.
Keep your mouth shut

Keep your mouth shut. The biggest mistake people make at audits is providing more information than the auditor asks for, leading to even further scrutiny. Speak only when spoken to, and answer only what has been asked.
Step 3.
Leave old returns at home

Bring only the documentation requested. Do not bring copies of previous returns that are not being audited, or you’ll open yourself up to questions about those, too.
Step 4.
Don’t shoot the messenger

Remain polite by reminding yourself that the auditor is just doing his or her job.
If another return becomes due while you’re undergoing an audit, request an extension. Otherwise, it may be dissected, too.
Step 5.
Appeal

If you end up owing money—which the majority of taxpayers who are audited do—appeal the decision. Roughly half of people who do get their penalties reduced.
Step 6.
Don’t follow up

Never follow up if you don’t hear anything after the audit. Auditors have 28 months from the time you filed your return to render a decision. By bugging them, you may push them to complete an audit that would have died on the vine.
Step 7.
Avoid future problems

When preparing your returns in the future, avoid these red flags: charitable contributions that exceed 5% of your income, taking undeserved tax credits, business expenses that seem excessive compared to your earnings, and careless errors like adding a column wrong or forgetting to attach a 1099.
Fewer than 2% of individual income tax returns are audited.

Comments View all (4)...

I am definitely bringing my guitar if I ever get audited. I can totally see how that would help prevent me from volunteering too much information. Not only that, but if 50 people a day were to walk into an audit and sing a bar of Alice's Restaurant, they may think it's a movement. The Alice's Restaurant Anti-Massacre and Audit Movement. Go team!

Reply about 1 year ago by scopius

Been there, done that, and lived to tell the audit tale. This video is "right on". Seven simple steps which, if followed to the letter, will definitely help a person survive the tax audit.

Reply about 1 year ago by TripleSkilled

Great video, Rosie !!!!

Reply about 1 year ago by stefanfalke

Thanks Stefan. I love the new photographs on your site. "Images of The King". Awesome Elvis shots. Especially that lady with the flower. You would think he was the real deal.

Reply about 1 year ago by Dynamic

View all comments (4)...