What should I do if I am audited?

    Published: 06-16-2009
    Views: 9,733
    Goodman & Company Tax Director Art Auerbach offers tips on what to do if you are audited.

    Host: What should I do if I am audited?

    Art Auerbach: If you are selected for exam, the first thing is do not panic. They are not coming to take away the kids or the dog, although, some taxpayers might prefer that that isn't going to automatically happen right. You have certain rights that are specified in what's known as the Taxpayer Bill of Rights. The Government has to explain to you what is being examined. What substantiation they will accept to support whatever it is they were examining. So the first thing here is don't panic. The people who have a right to panic are the ones who didn't pay attention to the earlier question and they created a writing of fiction on their tax return because now you have no substantiation. So you have a right to be concerned, if you get picked for exam but if you took legitimate deductions and you follow the rules and the guidelines on the tax return and you follow the instructions then there really is no need to panic. Now, what kind of exams are there? You can have what's known as an office audit. They will schedule an appointment for you. You go down to meet with an IRS agent and generally those are limited to certain specific items on the return. The IRS is now also doing what are called Correspondence Audits. That is, you get a questionnaire from the IRS Campus where you file the return and it says, we need some more explanation of item A, B, C, or D whatever it might be. Attach it, mail it back and send it back to them and the last level is the most comprehensive audit, is called the Field Exam. And that's when the IRS sends an agent to you. Now, couple of things here. If you use the paid preparer to prepare your return, get them involved because you may not understand what was not on the return. You may not understand the terminology but the paid preparer certainly will.