What to know when going through a tax audit by the IRS

On Behalf of | Jun 23, 2021 | Firm News

Receiving notice that the Internal Revenue Service (IRS) intends to audit your finances could make you feel frightened and panicked. Even if you have always done your best to meet all of your tax obligations, it is common to worry that you may have made a mistake.  

Tax oversights can have huge consequences. They can carry not just financial penalties but even criminal charges for the person accused. Understanding what happens during an audit can make you feel more confident about how you respond to the notification. 

Sometimes, you can complete an audit by mail 

An IRS audit can occur in one of two ways. You might either need to complete an in-person interview or simply submit certain records via mail. Obviously, a mail-in audit is the less intensive and frightening of the two options. Still, an interview can be a positive thing. It gives you an opportunity to present all of your documentation and to explain any perceived discrepancies noticed by the IRS. 

You have the right to get your own legal help 

An audit doesn’t necessarily mean criminal charges, but there can be criminal implications. As such, you have the right to bring a financial professional or even an attorney with you to an audit. You can partner with both if your situation demands that level of support.  

What matters is that you have an opportunity not just to partner with someone who knows the law better than you but also someone who will remain calm under pressure. An IRS interview can be very stressful, and a lawyer representing you will do a better job of calmly explaining the details than you might in the same situation.  

Even an audit that uncovers issues doesn’t have to mean criminal charges 

If there is a significant oversight or discrepancy in your tax history, the IRS will likely find that during an audit. However, such mistakes may not be an indication of fraud or tax evasion but simply confusion or minor mathematical mistakes when preparing your taxes.  

You may be in a position to negotiate to avoid criminal charges or to mitigate the worst consequences of the tax issues uncovered in the audit process. Sometimes, a repayment plan may be all that is necessary to avoid actual criminal charges. Understanding the audit process better will help you respond call me if you get a letter from the IRS notifying you of an upcoming audit.