Audit Representation

How to Deal with IRS Audit and Understand Its Procedure

Dealing with the IRS or any taxing agencies can fill the average taxpayer with dread. Being audited does not necessarily imply any wrongdoing on your part, because all kinds of errors can occur and the causes can ultimately be any combination of human and/or mechanical errors. The purpose of an audit is to enforce tax law and keep taxpayers honest.

Audit Selection

  1. Matching payer and payee documents. W-2 reports from your employer and Form 1099 bank interest statements must match with what you report. If there are any discrepancies, you could be audited. It is important that you provide complete tax documents before finalizing your return.
  2. Random Computer Audit. This is done based on an internal statistical formula.
  3. Triggered Examination. Any dealings or transactions with audited business partners or investors may trigger your audit.

Audit Methods

Most audits are done by mail. However, an IRS agent can conduct an in-person audit at various places. Before auditing, the IRS will notify you either by mail or telephone as to what documentation they require. If you choose to represent yourself be sure to read Publication 1, which outlines your rights as a Taxpayer. If you have any questions in regards to self-representation, please consult with our ITS team of Enrolled Agents.

Audit Timeline

Because each audit is unique, the time for each audit will vary.

Acceptable Records

The IRS will specify the documents needed.  By law you must maintain tax source documents for three years. Although we are not legally obligated, ITS Financial Group Inc. automatically maintains these documents as a courtesy to our clients.

Audit Result

  1. No Changes
  2. Agreed
  3. Disagreed

If you disagree with the audit, there are several options. At this point, however, the situation may become complicated and you might want to consult with a tax professional.

 

ITS Financial Group, Inc’s team of Enrolled Agents can reduce your stress by representing you and handling any IRS and State Franchise Tax Board issues. To learn more about ITS Financial Group, Inc, call 424-999-8829.