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Posted by Tiffany Gaskin

A Guide on Handling an IRS Audit

A Guide on Handling an IRS Audit

It's never good news when Uncle Sam flags you for an audit. It sends waves down your spine even when you think you have done nothing wrong. The fear of auditing is the best option for a taxpayer. One true thing is that the audit might not be the current taxes you filed. They started auditing three years back. 

For example, the IRS can flag tax returns of 2018 downward while you're in 2022. However, there are ways you can deal with the situation to reduce your anxiety. This article is a guide on handling an IRS audit like a pro.

About IRS Audits

If you receive a notice of an audit, the IRS wants to look closely at what is filled, including your income, deductions, and credits. The IRS target returns with errors based on some criteria. The office has three years from the assessment day to start and finish the process. Most tax audits come a year after you file your tax return and the audit process usually takes less than a year. There are three methods used to make the audit process shorter. 

  • By mail called a correspondence audit

  • In the IRS office called the office or desk audit

  • In-person, at your home or business, called field audit

The process will require your personal information and documents that claim your position. It is best to fill in the information correctly. But if you're using a professional, ensure you send the correct information to use and work with the IRS.

How to address an IRS audit

1. Understand the reason behind the audit.

  • Mail audits have lesser items than the IRS audit letter 

  • Office and field audit processes are tedious. They require tons of information and documents, and you'll face in-depth interrogation about your return.

Getting a tax professional to stand in for you and settle the audit process with the IRS is better.  

2. Prepare your responses to IRS questions.

  • Prepare all documents, receipts, and letters the IRS may ask for. And ensure you have the notice letter.

  • However, during the field or office audits, contact the agent beforehand. Get all your proof and information requested by the office and be ready to defend it to the agent. Revise the questions, which may include questions on additional income or unexplained spending. Basically, the process is tricky, so you must be prepared to explain every penny on the tax return for the entire year.   

  • Suppose you lack any proof of returns; you may have to refile the returns with the help of a third party or other records. The third-party primarily uses the affidavit, among other techniques, to attest to the omitted items.

3. Get the needed document and proof of your tax return filing

  • If there is any error on your tax return, the IRS will interrogate you longer. They will sanction you with an Information Document Request, which you must submit before the deadline. 

  • You and the IRS may disagree with some deductions that they consider illegal or missing extra income. However, if you have the proof and know tax laws, you may have a chance of winning the case.

  • Eventually, the audit will go two ways: no changes or adjustments need to be made. The IRS will send you their findings and give you a 30-day ultimatum called a 30-days letter to respond or appeal if you disagree. 

4. Appeal if you disagree

  • Within the 30-day letter period, the IRS Office of Appeals will be glad to receive your letter. After 30 days, you will get a letter from the IRS called a Statutory Notice of Deficiency. The letter marks the end of the audit and grants you a chance to appear in tax court. 

  • Concerning mail audits, the letter you receive will last for 30 days. Most taxpayers ignore this letter and lose their chances of appealing the findings with the IRS.



Tiffany Gaskin
Contact Member