During an IRS audit, you may feel confused, angry and frustrated. Your actions can determine the outcome of your audit. Avoid the mistakes listed below.
6 Big Mistakes to Avoid If the IRS Is Auditing You
Ignoring IRS Notices
Your IRS auditor may mail important notices or call you to discuss audit details. Read your mail, and return those calls. Ignoring the IRS won’t make the audit go away and could lead to higher penalties and fees or even criminal charges.
Receipts, bank statements and other documentation support your tax return. Instead of tossing those papers in a shoebox, take time to sort all your documentation carefully. These papers help you defend your tax return during your audit.
Disrespecting The Auditor
Your auditor may not evoke warm fuzzy feelings, but she is simply doing her job. Resist the urge to yell at, avoid or otherwise disrespect her; and show up on time for appointments, too. Your respectful attitude makes the process easier on everyone.
Making The Same Mistakes On Future Tax Returns
Several celebrities, including Nicolas Cage and Burt Reynolds, failed to pay taxes several years in a row, according the ABC News. They faced extremely unpleasant consequences. Don’t follow their example. Learn from your audit. Discuss what happened with your accountant and advisor, and come up with better systems and processes.
Spending Money Lavishly
You don’t have to put your life on hold during your audit, but exercise caution and spend conservatively. Large or numerous purchases may prompt your auditor to dig deeper into your finances and could increase the intensity of your audit.
Navigating The Process Alone
You’re likely an experienced and competent business owner—capable of working without supervision or external motivation. However, you’re also likely not a tax expert! Hire a qualified professional to help you handle your audit properly. We have handled several audits and understand what you are up against. Contact us today at 720-398-6088 for support during this challenging experience.