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Surviving a Tax Audit

When you receive an audit notice from the IRS, your first reaction may be panic, but you reduce stress by following this simple advice.

February 19, 2021

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Surviving a Tax Audit

There is nothing worse than having the Internal Revenue Service or another taxing authority chasing after you. However, as a taxpayer, you have rights, including the right to consult a lawyer. This article is in no way intended to serve as legal advice, and you should consult an attorney if you are facing a tax audit.

Look for an attorney who will provide customized solutions for difficult tax problems. When it comes to taxes, one size doesn’t fit all, and you should find an attorney who will not only minimize the taxes you owe within the tax laws, but also reduce your stress by taking the weight of dealing with the IRS on a day-to-day basis off your shoulders.

When you receive an audit notice from the IRS, your first reaction may be panic, but you need to assert yourself and let the IRS know that you are confident in your return. One of the quickest ways to regain your confidence is to set some ground rules for your audit. First, you have every right to establish the day and location of your audit. This will give you the necessary time to prepare. Second, you can educate yourself as to your liability and limit the audit to include just those issues relevant to the reason for the audit.

Next, know your stuff. Were you aware that you can claim a deduction without a receipt or cancelled check? While we’ve all been led to believe that you must have a receipt or canceled check to claim a deduction, few people realize that personal testimony may be enough to claim a deduction. If you have all the facts in order, reconstructed records, affadavits and other proof are valuable tools that can help you claim deductions when the original records are unavailable.

Plus, in an audit the IRS may need you to authorize them to do certain thing—extend the time they have to collect a tax from you, for instance. Don't agree to anything unless your attorney agrees.

Last, remember that an IRS auditor has no power to do anything without your permission; they cannot increase or decrease your tax liability, charge you with penalties or seize your assets. And, you have the Right of Appeal. Reminding your auditor that you know this may help you maintain control and pay only the taxes you owe.

So, when you receive an audit notice from the IRS, remember, don't panic, contact an attorney, and know your rights. These three simple steps will help you maintain control and reduce the stress that comes with the notice.