No matter who you are or how much you make, most taxpayers eventually have to duke it out with the Internal Revenue Service (IRS). The feared federal agency audits about one percent of the tax returns it receives each year. Now, that might not sound like a lot, but no one has a better home court advantage than the IRS. According to their own numbers, only about fifteen percent of taxpayers emerge from an audit review unscathed. The rest are forced to remit additional funds, not to mention fines, fees, and interest payments. With that in mind, here are six tips from an audit services professional that will help you during the examination process.
Tip 1: Check your anger at the door. Yes, the IRS and its representatives can be confrontational and combative… But the absolute worst thing you can do is to bring a bad or aggressive attitude into your meetings with them. Remember, you want to show them that you can be cooperative. If they get the impression that you’re difficult, they may be less likely to negotiate with you in the future.
Tip 2: Use their language. Like workers in any other specialized, highly technical profession, employees for the Internal Revenue Service have their own vernacular few are privy to. If you show them you can speak their language, they may treat you with more respect. For example, you should always ask for penalties and fines to be “abated,” rather than removed completely.
Tip 3: Don’t say too much. We know it sounds contradictory, but it is seldom a good idea to talk too much with IRS agents. They are, after all, not your friends. Revealing too much or elaborating on a simple question may lead to misunderstandings that result in additional investigations.
Tip 4: Be honest. Nothing good can come from lying to a federal agency. Although the relationship is inherently adversarial, it is built on trust. If an agent catches you in a lie, you will always be suspect 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 the slammer.
Tip 5: Call them before they call you. If you receive an audit notice, it is always a good idea to contact the agent in charge of your case as soon as possible. His name and contact information will be on the official letter. Do not go into details; simply let him 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 of our problems on our own. Unfortunately, that is not the case. As we mentioned, only 15 percent of audited taxpayers are not ordered to pay more. Everybody else has to pony up. As such, hiring a tax professional to provide audit services is often a wise investment. Not only do they know the tax code like the back of their proverbial hands, but they are also qualified to represent you in all future dealings with the agency. Tax professionals will always attempt to have your fines and penalties abated. They may also be able to arrange a payment plan for taxes that allows you to pay off your debt in monthly installments.
These simple tips from an audit services professional can provide you with a world of good in dealing with the IRS.