Individual taxpayers and business owners may feel anxious or fearful after receiving an IRS audit notice. However, preparing for an audit can help streamline this process and help you fulfill IRS requirements.
Take these steps if you have learned that the IRS plans to audit your personal or business tax returns.
Understand the audit process
Your audit notice provides information about the tax years subject to review. The IRS auditor will make sure that your tax returns for these years are correct by reviewing tax forms, receipts and other documents.
The notice also indicates the next steps you should take. The IRS conducts few audits in person. Usually, you will have to send your IRS auditor specific documents through the mail.
Organize documents
Start by marking the submission deadline for documents on your calendar. The IRS will likely give you 30 days to provide the necessary paperwork. You should prepare all the forms and documents listed in your audit notice. You should also gather all other tax paperwork for the years in question, either independently or with the assistance of your tax attorney or CPA.
Prepare for a decision
After you submit all the documents, the auditor assigned to your case may reach out to ask questions or request additional information. When he or she completes the audit, you will receive the IRS decision. Most people owe money after an IRS audit, but the auditor could also find that you overpaid your taxes or that your return is free of mistakes.
If you do not agree with the IRS decision in your audit, you have the right to appeal.
