You can avoid most IRS audits by doing a couple of things. They are:
- Report all Income for which you received 1099’s or W-2’s.
- Avoid schedule “C”.
- Set up some type of record keeping system.
- Don’t make your return look absurd. If it does, attach an explanation. When we say: “Don’t make your tax return look absurd,” we mean that your entire return must look reasonable. That goes for filing status, dependents, and expenses in relation to income. My firm has represented many clients who were audited and in most cases, we could see WHY just by looking at the returns. There would be adding errors, deductions on the wrong lines, deductions on the wrong form, missing forms, and often, messy looking hand written forms.
Also, most of the people who get audited are SELF EMPLOYED who have income and expenses reported on Schedule “C”!
THE MOST AUDITED FORM EVER KNOWN TO THE IRS IS SCHEDULE “C”!
Many people report losses on this schedule from their business, which causes all kinds of RED FLAGS at the IRS.
I suggest that people who are being audited for the form SCHEDULE “C” go through the audit and then try not to file that form in the future. By not filing the form SCHEDULE “C” their chances of being audited in the future drop dramatically. Call us about a better business formation.
People who receive an IRS AUDIT LETTER in the mail asking them to come to or to call for an appointment must know this EXTRA secret.
YOU DON’T HAVE TO GO! YOU DON’T EVEN HAVE TO TALK TO THE AUDITOR
As a matter of fact, going or talking to the auditor yourself is the worst thing you can do. The taxpayer Bill of Rights allows you to be represented by a CPA who can answer questions for you and provide documentation to the IRS. I STRONGLY SUGGEST THIS APPROACH. Many taxpayers attempt to handle their own audit or hire the person who prepared the tax return to handle it for them. The reason this usually does not work out is because most tax return prepares Do Not handle IRS Audits on a regular basis. The IRS can easily intimidate them, which usually results in an unfavorable outcome.
The best way to end an IRS AUDIT with a great out come is TO END IT THE FIRST MEETING. Whenever my firm represents clients in IRS AUDITS we actually perform a trial audit in our office before we ever meet with the IRS. This allows us to know which areas need more documentation or answers. When we meet with the IRS (WITHOUT OUR CLIENT), we can quickly answer the auditor’s questions, provide documents and get to the bottom line. We always meet the IRS at their office or at ours, but NEVER at the client’s.