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FAQs – Top 10 Audit Mistakes

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FAQs – Top 10 Audit Mistakes

ERRORS TO AVOID IN AN IRS AUDIT

1. Lack of Organization

The IRS investigation of you focuses on your organization. If you are organized and know exactly where all the evidence is, they tend to terminate the audit quickly. If not, they tend to dig deeper.

2. Not Having a Mileage Log

If you are a business owner and take vehicle deductions, the mileage log is the single most important piece of evidence in any audit. You are required to keep a log but many people fail to do so. So, if you have a log or an accurate recreation, then you have built your credibility with the IRS agent.

3. Arguing or being belligerent.

The IRS audit is not the time to make arguments. You must argue your case through the proper written channels. Being belligerent will make the IRS less likely to respond to your requests.

4. Arguing with your representative in front of the IRS agent.

When a tax return preparer and the taxpayer start pointing fingers at each other about the validity of items, the IRS agent takes notes about this and can take the stand to testify what was said. Avoid arguing with your representative.

5. Arguing unsustainable positions.

Don’t try to make a case that doesn’t exist. Admit it to yourself when your position is weak. But don’t admit to the IRS that you think your position is weak. Don’t say anything at all. Instead, bolster your strong points

6. Treating the IRS like your “friend”

Don’t try to curry favor with the agent by making small talk. Treat any contact with utmost formality. Begin and end each contact promptly and rapidly.

7. Failing to obtain the IRS file.

When the IRS investigates you they have a file on you, and the agent makes notes as the case proceeds. There are also documents that the IRS receives about you from various third parties. You are entitled to know what is in your file, even if you have to do a FOIA request.

8. Failing to timely respond to the IRS at appropriate times

Each step in the process has time limitations to protect your rights and various methods of resolving each case. Pay attention to the time deadlines for each procedure and always timely respond.

9. Contacting the IRS inappropriately.

Writing unsolicited letters to the IRS or responding to the IRS when you should remain silent can be disastrous. Seek professional advice if you’re unsure but talking too much to the IRS can only lead to trouble.

10. Giving the IRS inappropriate evidence.

Only respond to what is requested and is proper to give to the IRS. The more you give them the more the IRS will dig.

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