Here’s some advice from our Michigan tax lawyer’s point of view, Venar R. Ayar, on tips on how to survive an IRS audit, such as audit defense and strategy.
What is an IRS Tax Audit?
An IRS audit is a review and examination of an organization’s or individual’s accounts and financial information to make certain information is being reported correctly, according to the tax laws, to verify the amount of tax reported is accurate.
IRS Tax Audit Defense Strategies
Receiving a letter from the IRS for a tax audit is not something anyone hopes to experience in their lives, but they do happen, and it’s best to be prepared for them so you can approach the situation with confidence.
It’s all about strategy when it comes to handling your audit. The goal is to convince the IRS that you correctly reported all of your income. Here’s what to do:
1. Do not ignore a tax audit.
Follow the instructions, and pay attention to do specifically what you are asked, and nothing more. If you do ignore it, you will get a huge tax bill just adding to your costs. This will only make your situation worse. If and when you receive an audit notice, read it carefully. A timely response will also show that you are organized, and that you are not scrambling to prove falsifications.
2. Approach the situation with a positive attitude and strategy.
It’s okay to wonder or ask why you were selected for a tax audit. When dealing with the IRS, auditors will pick up on attitude. When you project confidence, they tend to believe you.
3. Don’t go to the IRS alone.
When it comes to tax strategies, it is also important to do your research so you know what you are up against. Ask questions and read up on something if you don’t understand it. In addition, it is best to seek a tax lawyer for tax relief. There is no way around a tax audit, so audit defense service will only help in your situation.
4. Schmooze the auditor.
Make small talk; play nice. I once went to an audit scheduled at the IRS, and noticed the auditor had photos of her dog all over her cubicle. I started a conversation about dogs, and she got so carried away that she nearly ran out of time for the audit– rushing through it and missing key points; resulting in my client walking away owing… nothing.
5. Manage your expectations.
The odds are against you, in this case. Don’t try to compromise with the IRS. Leave the negotiations up to your Michigan tax lawyer. Go into the situation knowing that although things could work against you during your tax audit, at least you have put your best effort into it.
6. Gather all information in an organized manner.
Make sure you collect all paperwork you need before you even attempt to go to the IRS. I once had a client with much unreported income. It was deposited into his personal bank account, and the auditor asked to see the statements. Had this gone wrong, he would have paid thousands of dollars for a mistake. What I did was led the audit meeting with all of the accounts I had proof of, therefore convincing the auditor that there was nothing more to see. By the time the auditor got to looking at the bank statements, (the last thing on his list) he was so used to everything matching up to the return dollar, that he breezed through them, missing all of the unreported income. With this tax strategy, the client then walked away, owing nothing.
7. Be patient.
It takes much time and memory preparing the information your tax defense needs to survive an audit. It’s a game of providing information and then waiting. And then, waiting some more.
8. Be polite.
You don’t have to become their best friend, but maintaining a cordial relationship will only help make the process and strategy go more smoothly. Try and remember that they are a person, just like you, and have a job, just like you. Try and make things easy for the IRS tax auditor so the odds will work in your favor.
9. Believe that you will get through it.
It’s not the end of the world. If you are an honest taxpayer, chances are you will survive this with ease. As long as you take the appropriate steps, and have key tax strategies, you should become victorious in the audit.
10. Be open to compromise.
You may negotiate tax issues with the auditor but not the amount of taxes to be paid. Allow your tax lawyer to do this for you. If you feel mistreated, you’re well within your rights to ask to speak to a supervisor, or even request a new auditor. If you don’t agree with the audit result, you may appeal within the IRS or go to tax court.
This is an excellent solution, providing much tax relief and benefit. If you think you might benefit from thest tax strategies, and want to talk more about it, give us a call, or send us an e-mail here.
[author] [author_image timthumb=’off’]https://www.ayarlaw.com/wp-content/uploads/2013/02/venar-about-sm.jpg[/author_image] [author_info]Michigan tax lawyer, Venar R. Ayar, founder of Ayar Law Group, holds ten years of experience as an accounting specialist and tax lawyer. He earned his Juris Doctor at the University of San Diego School of Law, receiving a Master of Laws in Taxation—the highest degree available in tax. His main focus has become Michigan tax resolution as well as IRS tax resolution, including individual and business tax matters; tax planning, tax compliance and white-collar criminal defense. His business background has helped him to become personable and understanding in his work. Representing clients before the IRS, Ayar’s practice and experience has proved him as an honest and dedicated leader in the realm of Michigan tax lawyers. Click here to contact your Michigan tax lawyer, Venar Ayar. [/author_info] [/author]