ValueYourMoney.org
12 Days of Personal Finance
Finance

What To Do When the IRS Comes-a-Calling

Texas CPAs Offer Tips on Preparing for an Audit

What’s the one thing that can send chills down a taxpayer’s spine more than a cold winter wind? The thought of an Internal Revenue Service (IRS) audit.

Texas CPAs say you should respond promptly if you receive an audit notice from the IRS. You can ask for a postponement in order to have more time to gather your documents and prepare for the audit.

According to Texas Society of Certified Public Accountants (TSCPA) Chairman, Kym Anderson, the IRS can generally audit your return within three years from the date the return was due or when it was actually filed.

However, the statute of limitations extends to six years if you substantially underreport your income and there is no statute of limitations when you fail to file a return.

“When you’re preparing for an audit, one of the first things to do is read IRS Publication 1, Taxpayer’s Bill of Rights. This document spells out how the IRS must conduct an audit and it explains the rights of a taxpayer whose return is being examined,” said Anderson.

Besides being aware of your rights, Texas CPAs recommend thoroughly reviewing your return to refresh your memory and to start collecting all the relevant records and documents you need to support income, deductions and credits.

In most cases, it’s also a good idea to enlist the services of a CPA or other tax professional. He or she can help prepare you before you go to the audit, accompanying you, or by attending in your place. 

 

Day Three