What Happens During an Audit “Part 2”

…Continued from previous post

This means that the taxpayer should be prepared to hand over their relevant documentation for the tax year under audit.

This is a list of records the IRS may request. The taxpayer should get the assistance of the tax professional (accountant, tax attorney, etc.) so they can properly navigate through this audit without additional issues.

Any attempts at hiding or losing records from the auditor will simply make the situation much worse.

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Without adequate records, the auditor can estimate the taxpayer’s income and/or expenses and impose a separate penalty for a failure to keep records.

Once the auditor has obtained the records, they will review all of the items and conclude the audit in one of three ways:

  • No change: an audit in which the taxpayer has substantiated all of the items being reviewed and results in no changes.
  • Agreed: an audit where the IRS proposed changes and the taxpayer understands and agrees with the changes.
  • Disagreed: an audit where the IRS has proposed changes and the taxpayer understands but disagrees with the changes.

Taxpayers under audit have the option to appeal.  

If a taxpayer disagrees with the auditor’s findings, they may request conference with an IRS manager.

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The taxpayer has 30 days to appeal the auditor’s decision.

If the taxpayer would like to move forward to with the appeal, then they will be working with the Office of Appeals on the case. The IRS also offers mediation regarding audits in order to avoid going to Tax Court regarding these types of issues.

Overall, best way to go into an audit is to be prepared.

Taxpayers should be diligent about keeping records of their finances and tax returns.

All information submitted to the IRS on should be substantiated and explained in a clear and concise manner.

Audits are an understandably stressful experience, but thorough record-keeping can make a dramatic difference in a taxpayer’s audit with the IRS.

Feel free to email us or message us if you have any other auditing tips or ideas!

Written By: Nushin Zarrabi 

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