The word “audit” tends to strike fear into the hearts of individual taxpayers and business owners alike. Even when you or a tax preparer have completed all of your tax forms as accurately and honestly as possible, the prospect of the IRS finding some inadvertent mistake or oversight during the audit process can be terrifying. Between the complicated (not to mention ever-changing) tax codes and the bureaucratic structure of the IRS, navigating the audit process can feel nearly impossible to the average person. If you are audited, it’s worth your while to consider hiring a CPA to help you get through the process as painlessly as possible. These professionals can not only help you understand what’s going on, but can also represent you to the IRS if the need arises.
In the most basic terms, an audit is when the government reviews your accounts and financial information to make sure that you’ve reported all of the information correctly and have paid and/or reported the accurate amount of tax. Due to the volume of taxpayers both individual and corporate in the U.S, most people do not get audited. In fact, only a small percentage of tax filers are selected for an audit each year. Some of these cases are selected at random. Others are selected because something about their returns serves as a red flag to the IRS. This may be anything from a large charitable donation to an unusually long list of itemized deductions to simply working in a job that tends to get significant cash payments or tips.
When you are selected for an audit, one of many things may happen. You may be able to complete it by mail. You may be asked to present yourself at an IRS office. Or, you may be asked to meet an IRS representative at your home, your place of business, or your accountant’s office. No matter which of these options the IRS requests, dealing with the audit process can often feel overwhelming and difficult. In order to make the process as smooth and secure feeling as possible, you may want to look at employing a tax services professional such as a CPA to help you.
Most of us are familiar with a CPA’s role in tax preparation, but these professionals are also trained and well informed when it comes to tax law and legal tax representation. As tax professionals, they are also familiar with the structure of the IRS, and with the various tracks that might come up in the audit process. If you are audited, your CPA can offer guidance in how to prepare whatever documentation the IRS asks for, and, in many cases, may even be able to do that preparation and submission for you. In a worst-case scenario, if the IRS finds that you have made a mistake at some point and you owe back taxes, your CPA can assist you in negotiating with the IRS so that you are able to minimize and pay back your debt in a manageable way. In short, working with a CPA through an audit process can significantly minimize the overall stress, difficulty, and financial cost that you incur.
There’s sometimes no telling what part of a tax return will cause the audit process to roll into motion. If you are selected for an audit, though, consider getting a CPA in your corner to help you make it through with as much ease and as little cost as possible.