Important steps to keep in mind on receiving the audit letter from IRS

One should always be prepared for an IRS audit to survive the same in best possible manner. It is recommended to file a genuine tax return because no one knows when the IRS will dispatch a mail informing of an audit. One should collect and preserve the bills and receipts of all the expenses and deductions made. The taxpayer should retain all the tax records and crucial documents related to finance for a minimum of 6 years.

On receiving the audit letter from IRS, it is best not to ignore the problem and take precautionary measures. IRS is empowered to resort to drastic measures including adjusting the overall tax liability, in case it does not receive an acknowledgment letter from the tax payer within 30 days. If IRS discovered that there is more money owed to them, it will send another letter informing the same and will start collecting the back taxes.

Usually the audit letter includes a list of documents which the IRS wishes to analyze including can celled checks, receipts, bank statements, etc. One should scrutinize the list carefully and collect the required documents before going for the actual audit. It is a good idea to gather extra copies of such documents, which are found missing and are required by the auditor, well ahead of the time. This could be done by contacting the respective bank or the credit card company. The tax payer is expected to bring all the documents requested of him at the time of IRS audit, failing which, he or she may witness an increment in the back taxes.

However, a person should carry only those documents, which were requested by the IRS. It will only trouble the auditor further if he is burdened with extra information. This may cause inconvenience to the taxpayer as well, as it would mean more questions for him or her. Another important requisite for the taxpayer is to get Xerox copies of all the documents in order to provide the auditor with his own set of documents. The tax payer should take top care to preserve all the original documents, in case they are required again for the audit process.

It is advisable to be cooperative and friendly with the auditor during IRS audit. No one likes to pay taxes and being audited, however, taking the grudge out on the auditor will only complicate the matter further. It is human nature to commit mistakes and tax returns is one of the mistakes one can make. Even though it is a tough job to admit a mistake, it is best not to argue with the IRS representative and admit it when they come up with evidence.