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IRS audits can be stressful, time consuming and, in some cases, expensive. This article gives an over view of how to approach an IRS audit.

The first step is always to gather information. Taxpayers should start by locating their tax returns for the tax year being audited & the tax year prior & subsequent to the tax year being audited. Taxpayers should then look for documentation to support any tax deduction or tax credit that they claimed on these tax returns.

Particular attention should be paid to expenses listed on Schedules E (for investment property) & C (for small businesses) & items listed on Schedule A (assuming that the taxpayer opted not to itemize their deductions). Mileage expenses, charitable gifts, contract labor, cost of goods sold, & other unusually large items will draw the IRS auditor’s scrutiny.

Also, taxpayers should double check the items of income on the tax returns to verify that they did not omit any items from their tax return. Taxpayers often discover that they omitted interest or dividend payments from small savings or brokerage accounts. In many cases taxpayers fail to report these items due to the investment company failing to send out the required tax documents to the taxpayer. Taxpayers should be prepare to explain any unreported income.

Having copies of each of these items to provide to the IRS examiner can prove very help-ful in resolving an IRS audit in a timely manner.

Taxpayers can expect that the IRS examiner will want to meet at the taxpayers house and/or business. The idea is that the IRS can ask the taxpayer to go fishing for additional documentation when they’re in these locations. That is why it can be help-ful for taxpayers to request to meet at the IRS examiners office.

Taxpayers should also be advised that the IRS examiner’s job is to assess the most tax possible. Unfortunately, many taxpayers forget this fact as the IRS audit progresses. The result is typically a notice of proposed adjustment mailed to the taxpayer a month after the IRS audit that is completely out of sync with what the taxpayer expected. To avoid this, taxpayers must always recognize the IRS examiner’s role & the taxpayer must be proactive in asking questions & determining what EXACTLY the IRS examiner needs to allow the taxpayer’s deductions & credits.

Assuming that there’re no items of unreported income & the taxpayer is able to substantiate all of their tax deductions & credits, then the IRS audit should be fairly straightforward. If the taxpayer isn’t able to substantiate deductions or credits or items of unreported income are involved or the IRS audit uncovers these items, taxpayers should immediately consult with an experienced tax attorney. The same goes for tax periods in which the taxpayer did not file tax returns. The relatively modest cost for an experienced tax attorney can significantly reduce the amount of tax that the taxpayer may end up having to pay.

http://www.irstaxtrouble.com>Colorado Tax Attorney Kreig Mitchell helps taxpayers resolve IRS tax troubles, including IRS audits, IRS collections, & IRS negotiations.

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