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27 Dec 2017
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Surviving an Audit

Getting a notice saying that you're going to be audited is an intimidating experience for anyone. The following article will give you some advice so you can stress less about meeting with an auditor.


The very first thing you should do is get help, hire a CPA to do a very thorough examination of your account balances, inventories, and certain transactions. When hiring a CPA, they will remove any errors so that your information is valid and reliable. CPAs will have a better understanding of tax laws and the audit process, and they will answer any questions you have and give you advice on what to say and do. Always be truthful and upfront when asked any question but only answer what they ask, don't provide any more documentation than what the IRS requests – this can lead to a more in-depth audit.


One very important tip is not to file a tax return when you are being audited. If you do, the audit could expand to include the new documentation. If it is too late, ask your accountant to file an extension as quickly as possible. As soon as you get the audit notice, get all of your documents organized. This process will take longer than you think. It could take several weeks to receive second copies. The law requires that you keep all of the documents you used to do your tax returns for a minimum of 3 years from when the tax return was filed, but they will not expand their examination past 6 years.


The audit process itself varies by the type of audit being done, how complicated the issues are, how available the information requested is and if you agree or disagree with the final findings. If at the end of the audit you agree with the audit findings, you will be asked to sign an examination report or a similar document pertaining to the audit. If you don't agree with the audit findings, you can request a meeting with an IRS manager who will give you an option for mediation or appeal offers if there is enough time left in the time limitations.


One final piece of advice is to always be courteous and professional with your auditor. The audit itself is unpleasant, but it will make it unbearable in a toxic environment.


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