How to Survive an IRS Audit

  • Stay Calm
  • Don’t Delay
  • Get Help
  • Prepare to Pay
  • Provide Documentation

Surviving an IRS audit is possible. Although taxpayers panic when they receive an envelope from the Internal Revenue Service (IRS), the purpose of audits is not punishing regular citizens or causing heart attacks. The IRS is looking for criminals. Regular taxpayers who are honest on their returns have nothing to fear. With the right preparation, anyone who hasn’t committed fraud can emerge unscathed from an audit. Here’s how to survive.

Ranking: 30 Top Affordable Master’s in Accounting / Master of Accountancy Degree Programs

1. Stay Calm

It’s natural to feel upset during an audit. It’s not natural to scream at an IRS auditor, write an angry letter to the agency or shred all relevant tax documents. Most audits are simple requests for additional information, called correspondence audits because they’re conducted entirely by mail or phone. It’s easy to survive these audits if emotions are kept under control.

2. Don’t Delay

The stress of an audit can only be resolved in one way: Providing the IRS with the documentation they’re requesting. Delaying won’t make the audit disappear. That’s why citizens should submit the required paperwork as quickly as possible. The IRS usually gives up to 30 days to respond to audit notifications, but taxpayers shouldn’t drag their feet for an entire month unless necessary.

3. Get Help

Taxpayers facing an audit are entitled to help. The IRS maintains a certification process for Enrolled Agents. These agents may be former IRS employees, tax attorneys or accountants. They are able to help clients with any aspect of an audit at any time and must pass a comprehensive test and attend continuing education classes. For taxpayers who are worried about an audit, an Enrolled Agent can be a calming presence. However, their services don’t come free, so taxpayers need to weight the depth of the audit with the cost of retaining assistance.

4. Prepare to Pay

Ideally, an IRS tax audit will result in no penalties, fees or interest. Reality isn’t always ideal. Taxpayers who are notified about an audit should be mentally prepared to pay back taxes, late fees, and other financial penalties. However, the IRS isn’t trying to punish taxpayers or squeeze millions of dollars out of working-class citizens. The agency is simply trying to get the money it’s entitled to receive. If a taxpayer has mistakenly claimed a small credit or forgotten to report a few hundred dollars in income, the fines will be proportional. The only people who need to worry about massive fines are those who have deliberately and systematically tried to cheat the system.

5. Provide Documentation

During an audit, the IRS wants to see cold, hard proof of any tax information. This means taxpayers should collect W2s, 1099s, expense receipts and any other paperwork relevant to their tax filings. It’s not enough for a taxpayer to simply state why they claimed a specific credit. The IRS must be shown why. Collecting the necessary paperwork helps citizens in two ways. One, it can be calming to provide the necessary evidence to defend against an audit. Two, some correspondence audits may turn into office audits. Having documents already collected means most of the prep work for an office visit is out of the way.

No one wants to get audited by the IRS. It’s a stressful experience. With these five tips, surviving an IRS audit is possible.