(Disclaimer: The information contained in parts 1 and 2 are for informational purposes only and are not designed to replace the advice of a licensed tax professional. If you are facing an IRS audit or other complex tax issue, seek the advise of a tax professional who can best assist you with your specific tax matter).
You have your audit notice in hand and have an idea how the audit process works. What happens once the audit begins?
How long does an audit last? This depends mostly on the complexity of the audit, the documentation review process, and scheduling. If both you and the auditor are able to keep each appointment as planned, that will help the audit progress smoothly and to finish up in a reasonable length of time.
An in-depth audit may require more meetings and more supporting documentation, while a less in-depth audit will take less time. Be sure to provide any requested documents or paperwork as soon as you are asked for them.
The audit is finished. What will happen next? Once your documents and records have been reviewed and you’ve had a chance to meet with an auditor (if required) your audit is officially wrapped up. An IRS audit finishes in one of three ways:
- No change: There are no changes to be made to the records and there is no money owed.
- Agreed: You understand and agree with the recommended changes. You’ll be asked to sign an audit report and to pay any money you may owe, but try not to panic: you can make payment arrangements. Here is where having a licensed tax pro at your side will be to your benefit. They will be able to walk you through your payment options if you owe money but are not able to pay in a lump sum.
- Disagreed: You may understand the auditor’s recommendations/findings, but you don’t agree with them. Generally, you can request a conference with a manager and/or file an appeal. This is where having a licensed tax pro by your side is essential. While the IRS is not out to deceive you, the audit process can be confusing if the agent doesn’t take the time to fully explain everything to you.
There is no doubt that an IRS audit can be stressful for the average taxpayer. Anything from the straightforward informational audit to a full-scale series of appointments with an IRS examiner can rattle your nerves. It pays to be well-organized in advance and to respond quickly when you do receive an audit notice from the IRS. Find a reputable tax resolution firm that will match you with a tax pro that can guide you through the audit process, assist you, and even represent you in dealing with the IRS.
An IRS audit is never anyone’s idea of a good time. By knowing that to expect and understanding how the process works, you’ll be much less likely to break out in a cold sweat if and when you receive an audit notice. Be informed, be organized, and have a tax pro by your side to help you understand the murkier aspects of an audit. Your nerves will thank you.