If you are audited, you will receive a letter from the IRS. This is their initial attempt in making contact with you regarding their findings. As you read the letter, be sure to pay close attention to the details as to why you are being told that you owe the IRS money. You will either agree with their findings or disagree.
If you agree that you owe the amount stated in the letter, you can start considering your payment options; you can pay the full amount, set up monthly installments, or request an “offer in compromise.” According to IRS.gov, “An offer in compromise allows you to settle your tax debt for less than the full amount you owe. It may be a legitimate option if you can’t pay your full tax liability, or doing so creates a financial hardship.” Some of the factors that the IRS will consider when it comes to determining your qualification for this option include: your ability to pay, income, expenses, and asset equity.
Commonly, the letter you receive is merely requesting certain information, such as your 1099 form or receipts for business meals you may have deducted. Simply sending in the necessary paperwork is usually sufficient and can clear up certain problems. If you are having trouble finding the requested documents or have been summoned to meet with an agent, bringing outside help would be a smart move. This may be a lawyer or an accountant.
Should you read the letter and disagree with their findings, you have the right to file an appeal within 30 days. There are many cases where appealing an audit benefits the individual, but there may be drawbacks or confusion on your behalf during the process. This is when you may also want to consider hiring a tax professional for guidance. GYL Decauwer LLP provides a full range of accounting, audit, business advisory and tax services for businesses, not-for-profits, and individuals. Its team is proud to respond to the potential challenges that are associated with receiving a tax audit.
No matter what, when it comes to being audited, always respond to the IRS. You will have a less stressful experience by being proactive and following through with the necessary steps versus ignoring notices.
If you have recently been audited and need assistance from a team member at GYL Decauwer LLP, please feel free to call (800) 644-0696 or (909) 948-9990.