Understanding IRS Audits

The Internal Revenue Service (IRS) has many ways in which they collect back taxes owed to them. They also have ways of checking to make sure that individual and business tax returns are done properly and legally. If the IRS wishes, they can audit you or your business to make sure that you have filed all necessary paperwork and did not file fraudulently. That is, they want to make sure you did not take credits that were not justified or that you filed all income that you collected throughout the year.

When the IRS chooses to audit you or your business, they will look at a portion or all of your tax returns. They will check out your expense deductions and other claims. While audits can be done in person by a representative from the IRS, most are done through written correspondence. The IRS may make requests for certain documentation. This is why it is important to maintain proper documents throughout the year. Keep all receipts in a safe place. Make sure all of your documentation is clear and well-organized. When you do file your returns, make sure all of the deductions you make are legal.

Remember that auditors are acting in the best interest of the American government and the IRS. They do not necessarily care about saving you from hassle or monetary consequences. You should always act cooperatively during an audit. If you feel uncomfortable dealing with an audit alone, there are many resources available to you. Consulting a knowledgeable tax professional is one way. Doing so can actually save you money in the long run because they know how to legally conduct themselves and represent you in the case of an audit.

You have the right to representation in the case of an audit. You will want to make sure that you follow the proper guidelines and send in the proper documentation. Doing so can avoid future penalties from the IRS and keep you from being audited further or from being subject to IRS levies, liens and other intrusive forms of collections.