How to Survive an IRS Audit

As I stated in How To Prepare For and IRS Audit, the first rule for surviving one is this: don’t freak out. Calm down, take a deep breath, and dial your tax advisor. No one should attend an audit without the back up of a professional. An experienced tax professional can tell you when it’s best to settle or if you should appeal and/or proceed to tax court. In fact, when you hire someone, you’re likely to get out of attending the audit at all.

Here are a few tips in case you’re not so lucky.

Never Argue
Never. Explain calmly. While your auditor may act in rude or unreasonable manner, your returning the favor is an invitation to your worst nightmare. If you and the auditor don’t see eye to eye, your recourse is to speak with a supervisor. However, keep in mind that only supervisors, not individual auditors, have the authority to expand the scope of the audit. Weigh your risk before you open your mouth.

Tell the Truth
Lying during an audit is against the law. If you don’t know the answer, say so. If you are asked a question that you don’t want to deal with or can’t handle, you can end the interview. Again, take a professional and you won’t find yourself in a position of confusion.

Make Copies
You don’t want to give your original documents to the IRS auditor. It’s not uncommon for things to get lost in the system. Photocopies should be acceptable documentation.

Keep Your Mouth Shut
Do NOT volunteer any information that hasn’t been requested. You risk having the auditor decide to look into other areas of your tax return.