Member Benefits from Union Plus

1. Correspondence audits are simplest. They usually involve one bit of unreported income or one deduction and can be handled entirely by mail. Simply mail copies of the information that supports your position. Correspondence audits are by far the most common, but most taxpayers don't consider them "audits."
   
   
2. Office audits involve meeting with a revenue agent at an IRS office about specific aspects of your return. The tips below apply primarily to office audits.
   
   
3. Field audits take place at your place of business, your accountant's office, or, more rarely, your home. Seek professional assistance if you're contacted for a field audit. Your Union Plus Legal Service attorney can help.
   

Here are six suggestions for handling an office audit:

1. Don't Hesitate to Seek Professional Help. Most correspondence audits and some office audits just involve clerical matters such as supplying receipts, but others involve complex legal issues or close judgment calls. You are entitled to be represented by an attorney, accountant or enrolled agent at any stage of the audit process. Once you choose a representative, IRS will not contact you directly but will work through your representative. If you have any doubt about your ability to handle an audit, call your attorney.
   
   
2. Know Your Appeal Rights. If you can't reach agreement with the revenue agent you are entitled to a hearing by the IRS Appeals Division. If their decision is unsatisfactory you have two choices: 1. appeal to the Tax Court or 2. pay the tax and sue for a refund in Federal District Court or the Claims Court. You shouldn't file for any appeal without professional advice, but it can help give you confidence to know the revenue agent's opinion isn't final. And it can help keep the agent reasonable for him to know you know.
   
   
3. Organize Your Presentation. Have copies available for the agent of all relevant records. (Never give IRS originals.) Have a printed copy of the calculations you rely on. Clearly present your reasoning, records and calculations. Don't fudge. If a figure is an estimate, show why it's only an estimate and why it's a reasonable one.
   
   
4. Don't Volunteer Information. Take to the audit only records related to the items specified in the audit letter. Your audit usually will not go beyond those items, but the agent is permitted to expand the scope of the audit. That's less tempting if it means he has to schedule another meeting. Don't offer explanations or records for other items, even if you can't see how they can hurt you.
   
   
5. Be Reasonable, Professional and Polite. You're unlikely to successfully bully or sweet-talk an agent. They've heard it all before. But they're human, so they'll find it easier to be reasonable if you are. If you think an agent is being unreasonable, you have a right to speak to his supervisor. That may also be advisable if you feel the agent is wrongly interpreting the law.
   
   
6. Be Open to Compromise. Agents are under pressure to close cases and generate revenue. They don't want too many of their cases appealed, and they don't want to lose the ones that are. That can give you leverage for an advantageous quick settlement or can mean you'd be better off waiting. Don't be pressured into an on-the-spot settlement, but recognize that it might be your best bet. You shouldn't expect a full deduction if you don't have full documentation.
   

Source: National Resource Center for Consumers of Legal Services/Unionplus.com.

• Posted: 06/01/07
Posted by: webmaster
• Category: Newsletter
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