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Will I be audited by the IRS? What you need to know about IRS Audits.

Every client's fear is the risk of being audited. No one wants to go through an IRS or state examination. We are experienced in the audit process and can defend you if you are under examination.

The IRS audited 0.5% of returns filed in the 2016 calendar year, according to the 2017 IRS Data Book. The odds are slim and definitely in your favor, but if it does happen, it can be a rather intimidating task to endure.

Below we run through some of the most common questions about IRS Examinations:

How long can I be audited for?

  • You can be audited within 3 years after you file (April 15th or later)
  • However, it can be extended up to 6 years if a substantial error is found.
  • If a resolution is still not found, the IRS can request to have the statute of limitation extended past 6 years. This is rare but can happen.

How quickly does the IRS act upon auditing me?

  • Once your return is filed, the IRS takes action as soon as possible if they find a discrepancy on your return. Most of the notices received within that tax year are computer generated CP2000 letters. For example, if you fail to report the sale of a security or income from a 1099-MISC, you will receive a CP2000 notice.

What are "mail" audits?

  • You will be notified by mail if the IRS needs to further examine your tax return. New York State (NYS) has started conducting "mail" audits where you will have to mail in documentation as requested. I just had a client receive a notice from NYS requesting proof of his $11,500 of withholding. We promptly mailed in a copy of his W-2 form and resolved the matter. The IRS and local state agencies are starting to use computers and technology to their benefit. Requesting confirmation from taxpayer is becoming more and more popular.

Will the IRS ever call me by phone?

  • NO, NO, NO. If you receive a call from the "IRS" demanding money for payment of tax due, hang up immediately and notify local law enforcement. There have been several cases of the recent years about individuals receiving phone calls indicating that they owe money to the IRS, pay us now, or go to jail. This is a SCAM!

What should I do if the IRS is auditing me?

  • First, make sure you respond to the notice. This is very, very important. The IRS does not like to be ignored. Ignoring the notice will put you in a deeper hole.
  • Hire a professional that can help you navigate the loopholes and understand your rights. Investing in a CPA or and Enrolled Agent if you haven't done so already will help you fully understanding what is being called in question. You will want someone to guide you through this process.
  • Gather all of your records together. You will want to organize all the documents that are being called into question together.
  • Find out if any of your records or documents are missing. Make calls to retrieve and get a hold of them as quickly as you can. This can be crucial to defending your case. 
  • Do not give the original copies of documents over to the IRS. If you do, you most likely will never get them back. Arrive with copies of the originals.

We cannot stress enough how important it is to stay on top of an examination. Organization and knowledge are key in succeeding in an audit. A qualified professional like us will help and guide you through the process.

If you have any questions or concerns, don't hesitate to contact me.

Chris Boyer, EA

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