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2016 Tax Olympics: Dealing With A Tax Audit (Day 8)

2:48 AM Jamaal Solomon 0 Comments Category :






2016 Tax Olympics: 
Dealing With A Tax Audit (Day 8)


So, you have been selected for an IRS tax audit. Tax audits can be stressful, frustrating, expensive and fun. Ok, tax audits are never fun. I was just testing if you were paying close attention to what I was writing. Just because someone has been selected for an tax audit doesn't suggest guilt. You will have the opportunity to defend yourself and prove all deductions, losses and income in question. Tax audits are not a game. If you don't take them seriously, you could be in serious financial or legal trouble. In today's post, I will go over some ways to survive an tax audit.

BRONZE MEDAL 



Stay Calm.....Your first tax audit letter will look pretty intimidating. Stay calm because the IRS will not start taking collection action immediately after the first letter. You will have time to prepare and defend yourself. I have found that a lot of the time people take the "I'm going to avoid the letter" strategy. This is the worst possible strategy. Instead of running away, learn your rights and options. Make sure to respond to the letter as soon as possible. Make sure you are aware of the response deadlines included in the letter.  



SILVER MEDAL




Reconstruct records....There may be some records that you have lost. Try to find a way to reconstruct the proof needed to satisfy the auditor's concerns. Remember that you can use bank, credit card and store receipts. You can also use signed contracts, registration forms, invoices, and loan documents. Make sure to present your evidence in a very organized way. Present the evidence as if you are painting the picture for the auditor. Don't allow the auditor to assume of any of the questionable items. Present the evidence in a way that answers all of the auditor's possible concerns. This strategy will allow the audit to go more smoothly. If you present your records in a disorganized way, the auditor may start asking for more documentation. Also, NEVER give the auditor more information that he or she asked for. For example, if the audit is only for the year 2015 then don't give the auditor information from 2014. Stick with the list that was provided to you.



GOLD MEDAL



Hire a qualified tax professional.....All tax professionals are not equal and you don't necessarily need a lawyer to represent you. Now, if the IRS mentions fraud then consider only hiring a tax lawyer. However, all other tax audit cases can be handled by non-attorneys like EAs or CPAs. It is just very important that you do your research before hiring an tax professional. Some tax professionals can sell water to a whale but in reality don't know what their doing. Talk to about three different tax professionals before hiring one. Base you decision on experience and honesty rather than just cost. A real good tax professional can save you a lot of headaches and money so don't be cheap when hiring one. Finally, be honest with yourself. You know if you are capable or not to represent yourself in front of the IRS. Trust me when I say, you don't want to battle the IRS unprepared.

Stay tuned for Day 9 event: How to deal same-sex state tax filings




Name: Jamaal Solomon

   



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