No matter who you are or how much you earn, most taxpayers eventually have to negotiate with the Internal Revenue Service (IRS). The dreaded federal agency audits about one percent of the tax returns it receives each year. That may not sound like a lot, but no one has a better premises advantage than the IRS. By his own figures, only about 15 percent of taxpayers emerge unscathed from an audit review. The rest are forced to remit additional funds, not to mention penalties, fees, and interest. With that in mind, here are six tips from an audit services professional to help you through the examination process.
Tip 1: Control your anger at the door. Yes, the IRS and its representatives can be confrontational and combative … But the worst thing you can do is bring a bad or aggressive attitude to your meetings with them. Remember, you want to show them that you can cooperate. If they have the impression that you are difficult, they are less likely to negotiate with you in the future.
Tip 2: use their language. Like workers in any other highly technical and specialized profession, Internal Revenue Service employees have their own vernacular that few know. If you show them that you can speak their language, they may treat you with more respect. For example, you should always request that penalties and fines be “reduced”, rather than eliminated entirely.
Tip 3: don’t say too much. We know it sounds counterintuitive, but it is rarely a good idea to talk too much with IRS agents. After all, they are not your friends. Revealing too much or developing a simple question can lead to misunderstandings that lead to further investigation.
Tip 4: Be honest. Nothing good can come of lying to a federal agency. Although the relationship is inherently antagonistic, it is based on trust. If you are caught by an agent lying, you will always be suspicious in the eyes of the IRS. It is also important to note that lying to the IRS is a federal crime that could land you in jail.
Tip 5: call them before they call you. If you receive an audit notice, it is always a good idea to contact the agent handling your case as soon as possible. Your name and contact information will be on the official letter. Don’t go into details; just let them know that you are serious about resolving your issue with the agency.
Tip 6: hire a tax professional. It would be a wonderful world if we could handle all our problems on our own. Unfortunately, that is not the case. As we mentioned, only 15 percent of audited taxpayers are not required to pay more. Everyone else has to stand up. As such, hiring a tax professional to provide audit services is often a smart investment. Not only do they know the tax code like the back of their hand, but they are also qualified to represent it in all future dealings with the agency. Tax professionals will always try to reduce your fines and penalties. They can also organize a tax payment plan that allows you to pay off your debt in monthly installments.
These simple tips from an audit services professional can provide you with a host of benefits when dealing with the IRS.
