A tax audit is an examination of your income tax return by the Internal Revenue Service or a state tax authority. This can be an intimidating experience. However, it is crucial to keep a cool head during the process. If you can prepare yourself for a tax audit, you’ll be better able to answer the auditor’s questions and avoid penalties.
The first thing that you need to do is get organized. Make sure that you have all of your records organized in chronological order. Then, start gathering information you need. You should also be prepared to answer any questions that the IRS may have. Most people give out too much information to IRS agents, so it’s essential to keep all of your information organized. You can also hire a tax attorney to assist you with the audit process. An attorney will have the ability to present the IRS with limited information that will not reveal any information that may put you at risk.
If you are not satisfied with the audit results, you have the right to appeal. If you feel that the findings are not fair, you can appeal them within 60 days. This allows you time to discuss the issues with the auditor and challenge the findings. Normally, issues are settled out of court, but if they are not, you can contact the Department’s Taxpayer Advocate.
A tax audit begins when the Department of Revenue issues a Notice of Intent to Assess (NOIA). This notice is issued when the DOR finds inconsistencies or questionable issues in the taxpayer’s filing history. If you don’t respond to the notice, you may face penalties and interest. However, the DOR may waive penalties in certain circumstances. These decisions are based on the facts and circumstances of each case.
In some cases, you may not even be required to pay the taxes that were the subject of the audit. If the IRS disagrees, you can dispute the findings and request an appeals conference. This will give you the opportunity to present your case to the IRS manager. Regardless of the outcome of your case, you should not be afraid to fight an audit.
If you do not wish to hire a tax professional to represent you during the audit, you may be able to use tax preparation software. Otherwise, you may need to appear in person. If you are unable to attend the audit, you can request a reschedule. The IRS can even ask for additional information or documents if necessary.
The IRS uses a computerized scoring system to determine if a taxpayer has made a mistake or not reported all their income. A high discriminant score could lead to a tax audit. It is also possible to face penalties if you have filed a return incorrectly.
