Responding to an Audit

Being audited by the IRS is intimidating, whether you are an individual taxpayer or a business owner. Thousands of people are audited every year, and many meetings end without severe consequences, but how you respond still matters for keeping a clean tax record.

Responding to an audit means navigating unfamiliar tax language, from the notice itself through a possible meeting with the auditor. You can interact with the IRS on your own, but getting help from an experienced audit attorney is usually in your best interest. Your response should be thoughtful and planned, since the IRS is a federal agency with considerable power.

What documents the IRS requests

The goal of an audit is to verify the accuracy of your return, and the IRS requests specific financial documents to support what you reported. Your notice will list exactly what is needed, which can include:

• Bank account statements, including offshore accounts
• Receipts, bills, and invoices, including paid invoices proving expenditures
• Business and personal credit card statements
• Reports from bookkeeping software
• Loan agreements and medical or dental records
• Employment, business, and legal documents
• Proof of income through W-2s, 1099s, and self-reported income

The IRS may request other documents depending on the reason for the audit. At an in-person meeting, you can also bring documents you believe support your return; the IRS reviews them or requests a follow-up meeting.

How to respond

The IRS notifies a taxpayer of an audit by mail and may initially request documents by mail, fax, or email. Some cases require an in-person meeting, which taxpayers should approach calmly and politely even if the timing is inconvenient or costs are mounting. The IRS generally grants a single extension for taxpayers who need to reschedule. An experienced attorney can attend many of these meetings on your behalf.

Never mail original financial documents to the IRS unless specifically asked for an original. Auditors typically prefer hard copies because they are harder to edit than electronic ones, and may request faxes, which can become a hassle if a line is busy or a document is damaged in transmission. Many filers hire a lawyer specifically to manage this back and forth.

The value of professional guidance

An IRS tax lawyer represents your interests throughout the process, whether the audit happens by mail or in person. If you have already gathered documents and want to know what comes next, see preparing for an audit for the earlier steps. A skilled attorney typically:

• Explains your rights and responsibilities during the audit
• Assesses the audit notice and advises what to submit and how to respond
• Develops a strategy for responding to the audit
• Manages communications with the auditor
• Identifies opportunities to clarify misunderstandings or errors
• Helps you file an appeal if the result is wrong

Your lawyer answers your questions and provides guidance suited to your case throughout the process. The more you understand about how an IRS audit works, the better prepared you are to navigate it.