How to Deal When You’re Audited By the IRS — And Your Records Are a Complete Mess

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Paperwork nightmares strike the best of us. Unfortunately, those messy or missing records can prove a real liability when the IRS comes calling. If your records are in shambles, you may struggle to prove to the IRS that any deductions you made or credits you took advantage of are valid. All hope is not lost, however; follow these simple steps to prepare for your IRS audit:

List All Essential Records And Begin Searching

Begin by drafting a list of all records that you could possibly need. These may include receipts, invoices, or credit card statements. Examine any deductions you claimed in your latest tax return and make every effort to find concrete evidence to support them. This evidence won’t necessarily be tangible; some documentation may be available in a digital format.

Determine Which Records Are Missing — And Obtain Duplicates

Simply informing auditors of missing records isn’t good enough; make every effort to replace them. Faced with a report of absent records, your auditor will either request that you obtain whatever is missing, or worse, outright deny any deductions that cannot be proven.

If Possible, Recreate the Expenses

According to precedent set in the well-known United States Tax Court case Cohan v Commissioner, estimates can sometimes be made of expenses if direct proof no longer exists. For such estimates to be valid, a foundation of evidence must indicate that the expenses actually occurred and were warranted.

There’s no need to freak out if you’re in the midst of an IRS audit; the Highland Tax Group will provide strong advocacy every step of the way. Call 720-398-6088 at your earliest convenience to determine how we ease the burden of your audit.