Armed and Audited

You have been given notice on a looming IRS audit. Great, now the IRS is going to be poking into your finances. Now you have big IRS problems.

Before you do anything else, scan the notice. Find out exactly what the IRS needs, the year they are auditing, the kind of audit they're performing, and what papers they need you to present at the audit. Also, take note of the date you have to respond to the IRS by. You're often given thirty days to reply.

The goal is to give facts on the exact year and documents being audited only. Don't disclose extra information as these may provide the IRS more cause to scrutinize you further.

The information you gave on your tax return may be supported by the following papers:

• Bank statements
  
• Your cancelled checks
  
• Receipts for the deductions claimed on the tax return
  
• Report of income statement
  
• Payment verifications for your mortgage, property tax, donations, etc.
  

Start getting organized as soon as you receive the notice. The documentation may take a long time to gather, as you may have to get them from other institutions.

Answer the auditor's questions truthfully but do not talk too much while on audit. They know this can happen when you are nervous. Consider using the following statements when giving answers: Yes, No, I don?t recall, I?ll have to check on that, What exactly do you want to see?, and Why do you want to know?

The documents specified on the IRS notice have to be the only documentation you should provide. Leave everything else at home. In the event that questions arise concerning a different tax year or about documentation not requested on the notice, you may simply say that the information is at home.

Your IRS problems will be over if you find the audit outcome agreeable and pay your tax liability. If you find the results unfair, though, you have the right to ask for an appeal.