Lisa, I received a letter from the IRS saying they are auditing my 2009 personal income tax return. I am petrified, even though I don’t think I did anything wrong. Could you please explain the audit process? Thanks, Thomas
Sorry to hear about this unhappy event. The first thing you should do is to contact a tax attorney or CPA to represent you in the audit. It is rarely advisable to handle the audit yourself.
There are different types of audits. Sometimes the IRS will conduct an audit by mail if the issue is a simple one. An audit can also be done by an in-person interview during which the auditor will review your tax records. (The IRS will tell you what tax records you need to show them.) This interview could be at an IRS office — this is called an “office audit.” Alternatively, the audit may be held at your home or your accountant's office — this is called a “field audit.”
In addition to the right to have professional representation during the audit, you have other rights. Those include the right to:
- Professional and courteous treatment
- To know why the IRS is asking for information, how they will use it, and what will happen if you do not provide the requested information
- To appeal disagreements, both within the IRS and before the courts
The audit length will depend on several factors, including the type of audit, the complexity of the issues, and your agreement or disagreement with the auditor’s findings. An audit ends when: you substantiate the issues being reviewed and no change is made to your return; the auditor proposes changes to your return and you agree; or the auditor proposes changes to your return and you disagree.
If you agree with the audit findings, you will be asked to sign a form. If you owe money, there will be payment options available. However, if you are unable to take advantage of the payment options, the IRS may begin collection proceedings, such as putting a lien on your assets. If you disagree with the audit finding, you are entitled to file for an appeal conference. Most disputed audits are resolved at this conference. Although in fairly rare cases, you and the IRS may end up in court.
Thomas, I wish you the best of luck. This column is only a basic overview of IRS audits. However, I hope you have a better understanding of the process.
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DISCLAIMER: Please be aware that this column provides only legal information of a general nature and is not intended as legal advice for any person, group of persons, or entity. You must always consult with an attorney with respect to your particular legal situation and circumstances.