Don't Go It Alone: When you receive a letter notifying you that your file will be audited, contact your tax professional immediately. Meet with him/her to review the IRS letter and the return(s) in question BEFORE speaking with the auditor. This is critical. Without the technical expertise of your tax professional, you could be placing yourself at serious financial risk. Your tax professional is a guide and an advisor to help identify your areas of exposure and help you determine your approach. If necessary your tax professional may need to accompany you to your IRS interview.

Don't Delay An Audit Without Good Reason: Delays may result in the agency coming up with more areas to check. For example, if they feel you are being unresponsive or uncooperative they may extend the audit to include additional years or additional schedules.

Be Courteous And Confident: Treat government employees with respect. Be polite and professional when speaking with auditors. Be clear and steadfast when making your point(s). Consider settling/ conceding only if you have reviewed your file with a tax professional who can advise you on how to handle those areas where you may have some exposure.

Take Your Lumps: If you misrepresented a line item on your return (i.e. you recorded an amount that is more than your receipts reflect), be prepared to own up to your mistake. Be sure to consult with your tax professional on these points. Show the auditor the receipts you have and let him/her know that the additional amounts cannot be validated, but the amounts are real. Do not schedule a second appointment for documents you can not produce. Show the auditor some courtesy; do not insult his/her intelligence. This usually makes the situation worse than it has to be.

Plan Ahead: Today and everyday make decisions as though you will be audited. Keep receipts for items included on your return, particularly your Schedule A, Schedule C, and Schedule E. Business owners should make purchases with a check or credit card - avoid cash purchases. That allows for easier tracking if you need to produce records for an audit. Use a simple filing system to retain back up copies and records. Keep documents that support your decisions just in case you need to present them for an audit.

These articles are in intended to be general guidelines and information to the public.  Be sure to consult with your tax professional regarding your specific situation.