What Do I Do if I Receive an IRS Audit Letter?

So, you received an IRS audit letter? Upon opening it there is a good chance that your stomach sank. This is not the type of letter that you want to receive from the IRS. Simply put, it means that you are being audited and any mistakes could possibly come back to bite you. Did you know audits can actually go both ways? You can be audited and have the IRS owe you money after it is over. Say they catch one error, but you find two other errors that go in your favor. That being said, you don't have to be scared of an IRS audit letter. In fact, if you take the right steps you can get past this part of your tax life in no time at all.

Here are several steps to take if you receive an IRS audit letter:

1. Do not panic! You may feel like the best thing to do is sit down and cry while declaring that the world is coming to an end - this is a mistake. The more you panic the worse things are going to get. Stay calm so you can handle this situation in the best manner possible.


2. Read the letter to see what the IRS is requesting. For instance, the letter may state that the audit process is just beginning and what you are supposed to do next. Or, it may say that you owe money and your situation can be resolved if you pay it. No matter what, make sure you take your time reading the letter. Also, don't ever jump to conclusions.


3. Get in touch with a tax professional. You never want to represent yourself in a tax audit case. You do not know the tax code better than a professional. A professional, such as an enrolled agent, can act as a liaison between you and the IRS. In other words, you will never have to directly communicate with them.


4. Discuss your situation with your tax professional. Chances are that you will be able to get to the bottom of any problem that has come up. An audit is not necessarily going to turn up a problem. In fact, many times taxpayers get off without having to pay another dime and some even end up getting more money back.


5. Don't hide and communicate effectively with the IRS. Many people get so scared that they don't act on an IRS audit letter right away - this is a major mistake. You must deal with this situation because the IRS is not going to let it go.

If you receive an IRS audit letter you should follow these five steps. Be sure to contact a tax professional to help with your audit if you are unsure of what to do or know you have made an error. Sometimes a tax professional can limit any penalties you will receive and can find some ways of getting around certain things in the audit.

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