California’s Taxpayer Transparency and Fairness Act of 2017August 22, 2017
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You just got a notice about a tax audit: what now? To resolve the situation, take these steps:
Read the notice carefully
- You need to know what exactly the IRS wants. Not every letter from the IRS means an audit.
- Find out which portions of your tax return are being audited, since it’s not always the whole thing.
- All IRS letters and notices have a number in the upper right-hand corner. These should tell you what specifically is in question; find out the audit’s focus so you can prepare.
Find out how you’re being audited
There are different kinds of tax audits, and each has its own requirements:
- Correspondence Audit: the IRS wants more information on part of your tax return like checks, receipts, and similar information.
- Field Audit: an in-person audit with an IRS agent at your place of business or your home.
- Office Audit: an in-person audit at the IRS Service Center.
- Taxpayer Compliance Measurement Program (TCMP) Audit: this is the most in-depth audit, which will demand documents for every part of your tax return.
Don’t ever go it alone for field or office audits and TCMP audits in particular.
- Start to gather the relevant documents and receipts.
- Never send originals or your only copy.
- Never send more than is requested to avoid broadening the scope of the audit.
- Request duplicate documentation for anything you can’t find immediately since missing or lost records are no excuse for auditors.
- Organize your records.
- If you can’t document something, seek support from third parties to determine a reasonable way to verify your claim’s accuracy.
- Always be courteous, polite, and responsive.
Get a tax lawyer
- Hire an experienced tax lawyer sooner, not later.
Being prepared is the key to surviving an audit and emerging with the best possible outcome. Contact the Tax Law Office of David W. Klasing for audit advice.
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