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10 Hints to Surviving an IRS Audit

It can happen once a year, and for some of you it will be the most painful and uncomfortable experience of your life. If you haven’t figured it out yet, I’m talking about an IRS audit. Nearly 1.2 million people went through this horrendous process in 2008 and lets hope you don’t fall victim to it in 2009. By the end of this article I will introduce and explain ten helpful hints that could guide you to victory over those notorious money volchers.

Rule 1- Don’t ignore your notice.
The IRS will generally give you what is called a “30 day notice.” This notice indicates they are giving you a grace period to collect any necessary documents for your audit. Make sure you respond to it as soon as possible. Ultimately, the faster you respond the better you look.

Rule 2- Read and follow the notice instructions thoroughly.
The audit notice that you receive will explain everything. From the items that you are being examined for to what records are deemed relevant to the audit. Like anything in life, if you follow the directions you are bound to achieve what you need to accomplish.

Rule 3- Research Tax Laws
Research any legal tax issues that are applicable to your specific audit. There are many resources available to the taxpayers. Taxpayers can either use IRS publications or any sort of commercial tax guides. These documents are free and open to the public. If you are still unclear about a tax law, consult with a tax attorney or professional private auditor.

Rule 4- Never host an audit.
Always keep the IRS away from your business and home. Instead, ask to meet at a convenient location for them. The more work and miles the IRS agent puts into the audit the better chance that they are going to grill you for the taxes owed. As a taxpayer you should go out of your way and by doing so you could save thousands.


Rule 5- Organize and Prepare records.
Without a doubt by being organized and prepared you are more likely to succeed. Making the IRS audit easier will win you points in the end. Persuade the auditor to believe that you are organized and well documented. Make sure you have at least three full years of tax returns or records with you. Remember the smoother the audit goes, the better chance of a victory.

Rule 6- Bring only the documents asked for by the auditor.
Supply the IRS agent with the records he/she only asked for. Any additional items should be left at home. Giving the agent a limited scope of information to analyze will ultimately help you in the long run. Most “bad audits” occur when taxpayer’s bring in extra documents giving the IRS agent an opportunity to find more faults in your return. Avoid this at all cost.

Rule 7- Do not answer unless asked.
Never give an IRS agent any more information than he/she is entitled to. Don’t speak unless spoken to. Stay on topic and don’t wonder. Make a conscience effort to think before you speak. One little flop could cost you the audit.

Rule 8- Do not be rude.
Like anyone else IRS agents like respect. Taking out your frustration on these professionals will only hurt you. Understandably you may be in a tough predicament, but you must handle yourself with class. Always remember to be courteous to the auditor even if they aren’t courteous to you.

Rule 9- Know your rights as a taxpayer.
It’s ok to disagree with the auditor. Know that you have rights as a taxpayer. Publication 1 in the “Taxpayer’s Bill of Rights” will explain all your rights in detail. If you feel that you are being treated unfairly ask to speak with the auditor’s manager for a “retrial”. By asking for a “retrial” you are simply asking for someone else to audit you. This can either help or hurt you.

Rule 10- Appeal your results if necessary.
When you get your final report, call the auditor and state you are not satisfied. Ask to speak with their manager to see if you can reach an agreement. If nothing is settled tell the manager that you would like to go to the Appeals Court within the IRS. From there it is a coin flip to see who wins. Hopefully it is in your favor.

Once my list was completed I felt that it was necessary to set up an interview with Mark Hazley, a manager with the IRS to seek his personal opinion on my so-called “hints”. During our conversation Mr. Hazley went on to say, “If there is any advice that he could give it would be to follow rules 5 and 9.” Following that thought Mr. Hazley went on to touch on rules 3 and 9 as well. After completing the reading the IRS manager left me with this quote, “In my eyes these rules are up to IRS standards.”

Readers please remember audits don’t have to be a complete nightmare. You are now fully aware of some rules to abided by to help make the process less stressful and hopefully more successful. No one wants to get audited by the IRS, but with this newly acquired knowledge you are prepared to face this hardship and are well aware of what to expect before, during, and after an audit.

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