Receiving an audit notice from the Internal Revenue Service is not something anyone would wish on their worst enemy but the reality is audits do happen and if you are knowledgeable and prepared, you can get through the audit and come out on the other side safely. The best way to start with tax audit defense is to understand your rights, dispel the myths, understand your appeal rights, and know help is available.
You have Rights, Learn Them
First, it is essential that you know you have rights. In fact, the more rights you exercise, the better off you will be. For instance, there are 3 main rules you need to understand before proceeding forward:
You have the right to:
Have the audit conducting during a time and at a place convenient to you. This allows you time to prepare and a place that makes you feel comfortable throughout the process.
Have the audit process recorded, provided the IRS is given the same right. Those who chose to record the proceedings do so because it guarantees the IRS representative will not change any of the rules during the audit.
Place limits on the extent of the audit and can cut out any issues that are not related to your taxes or tax liabilities. This helps to save time and frustrations across the board.
Dispel Audit Myths
IRS representatives have been known to play a good game of bluff. Many taxpayers fall for what is first told to them without ever questioning a thing. There are three very common bluffs/myths that can be dispelled right now to allow you more standing in the audit process.
The IRS may tell you:
Sorry, you can not claim a deduction without a receipt.
You are not allowed to challenge decisions made by the IRS auditor.
You have to provide the auditor with anything they want to know about your personal finances.
On all accounts, the three most common bluffs are indeed bluffs. You have every right to question the process you are going through, provided that it is a calm, reasonable manner.
Right To Appeal
If you go through an audit and eventually the auditor reaches a decision that seems unfair or unrealistic to you, you can bring the audit decision to a higher level known as the Right of Appeal. Most people think the decision is once and done and that the auditor is all-powerful and can promptly hit you with penalties or seize assets. The fact is that is not true and the IRS auditor really hasn’t much power at all. In the event an IRS auditor tries to collect more tax liability than you actually owe or denies you of any of your rights, you can not only appeal the decision, you may also recover any costs and fees associated with your appeal.
The audit process can be tedious and frightening but if you approach the process with knowledge of your rights, you will be less likely to feel strong-armed into decisions you do not agree with. By all means, you are to act responsibly and answer honestly about your information provided to the IRS, but don’t let a good bluff cost you more than you owe.
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May 26th, 2010
[...] presents some great tips on what to do in a tax audit in Tax Audit Defense: How to Defend Against an IRS Audit posted at Back Taxes [...]
January 26th, 2011
last year i had a friend and her lil boy not even 3 years old stay with me when she and her boy friend split up…. i was given permission to claim the child…. i had birth cert….sscard…noterized letter from her mother statiing that they did stay with me….. welll i was denied this proof from the irs and they want me to pay the refund back….they also wanted medical bills and professional day care proof…. child was already on medicare which went to his fathers…and the mother didnt wrk……whatcan i do….