If you have never had problems with your taxes before, getting a notice from the Internal Revenue Service that they are auditing you can be a bit alarming. The word audit is scary to a lot of people, simply because they do not know what to expect. Knowledge is power, and knowing what to expect during the audit process can help you and other New York residents in your same position get through it relatively unscathed.
The first thing everyone should know about audits is the IRS notifies taxpayers that they are auditing them. Most people get robocalls stating that they are in trouble with the IRS. This is not, nor will it ever be, how the IRS contacts taxpayers. If the IRS is auditing you, it will send you an official letter in the mail with contact information regarding the individual handling your case. What comes next?
The IRS handles audits in one of two ways: via mail or in person. Most people can complete their audits via mail. This requires little contact with the IRS. How do you know which is a requirement in your case? It will be in the notification of audit letter sent to you. Also in that letter will be instructions for what you need to do. If audited via mail:
- Send any documentation asked for
- Send it in the required time frame
- Wait it out
The audit process can take some time, though IRS agents work as quickly as they can so as to not drag it out any longer than is necessary. Once the agent has completely handled your audit by mail, and as long as you send all the information they ask for right away, you should get notification of IRS findings in a matter of weeks.
In-person interviews are usually only necessary when there is a major concern about your tax filing. Interviews may take place in an IRS office, at your home or place of business, or at your accountant’s office. Your job is to show up on time and with all documents needed by the IRS. Findings in these cases can also take several weeks.
There are three potential outcomes to a tax audit. These are:
- Change to your return and the need to pay additional taxes and penalties
- No change
- Dispute-proposed changes to your return
If you choose to dispute the findings of an audit, you only have so much time in which to file your challenge. You also need documentation to support your case.
Know that the audit process is not something you have to go through alone. You have the right to seek help going into the audit or after if you choose to appeal the IRS findings.