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How To Survive A Tax Audit

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If you receive notice of an audit, DO NOT PANIC. Read the notice carefully to see exactly why you are being audited. Please do not think that the IRS is out to "get" you. Remember, a computer chose your return for audit. Yes, it is unfair that you should have to deal with this on top of everything else, but if you approach it calmly and carefully it will go a lot more smoothly.

If the deadline for filing your new return is approaching and you are being audited, your new return could be audited as well. Consider postponing the filing of the new return by filing an extension. You can then file the new return after the audit is complete. NOTE:  When filing the extension, be sure to pay any taxes you expect to owe to avoid penalties.

At the conclusion of the audit, the examiner will present you with an agreement form for you to sign if you agree with the result. 

  • If the IRS makes no changes to your return, you will receive a letter in a few weeks stating that the examiner proposed no changes to your return. Keep this letter with your tax records.
  • If the audit determines that you are due a refund, you will receive the money soonest if you sign the agreement form when it is presented to you at the end of the audit.
  • If the audit determines that you owe money and you cannot readily pay the amount due, read: "Paying The Piper."

If you do not agree with the resuilt of a tax audit, you can appeal - first informally, and then formally.

The following sections tell more about the above subjects: 

NOTE:

  • For information about what to do to avoid a tax audit in the future, click here.
  • For information about free tax counseling, click here.

Start by reading IRS Publication #1 "Your Rights as a Taxpayer." You can get it at www.irs.gov/publications/p1/index.html offsite link. Also consider reading the more extensive "Publication 556: Examination of Returns, Appeal Rights, and Claims for Refund", which you can read online at www.irs.gov/pub/irs-pdf/p556.pdf offsite link.


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