Now that we are over a week removed from Tax Day 2017, people throughout Tennessee and across the nation are officially breathing much easier. Indeed, those who put filing their returns off until the eleventh hour have likely already forgotten about the last minute dash to their accountant’s office or the post office, and instead focused their thoughts on a much-needed return.
While many taxpayers will receive a refund in the coming weeks, many others will likely receive a notice of an audit. If this seems hard to believe given the decline in the audit rate in recent years, experts indicate that this trend is now likely to be reversed, as the Treasury Department has become all too aware of its inaction in this area.
As discouraging as it can be to hear this, it’s important for those whose tax returns are selected for an audit to understand that there are steps they can take to protect their best interests going forward.
Make sure the notification is proper
It’s imperative to understand that the Internal Revenue Service will never notify you of an audit via phone call or email, or demand money through either form of communication. As we’ve discussed before, such communications are typically scams.
The only way the agency will notify a taxpayer that their return has been selected for an audit is through a letter on an official letterhead that outlines everything from the return(s) to be audited and the documents it wants to see to the method through which the audit will be completed (mail versus in-person).
Make sure you proceed with caution
Once the initial shock has of learning an audit is imminent has worn off, a taxpayer will need to determine how they want to proceed: on their own or with the assistance of a professional.
While the possibility of having to pay additional taxes might cause people to dismiss the latter option automatically, experts indicate that this isn’t always the best option — especially if an in-person interview is requested.
That’s because IRS agents are trained professionals seeking to learn more about whether there has been an overstatement of deductions or an underreporting of income, meaning they know just what questions to ask and just how to trip people up.
This isn’t to cause unnecessary alarm, but rather to impress upon people the importance of considering retaining the services of a tax professional who can guide them through the process and protect them from these sorts of traps.
We’ll continue this discussion in our next post, focusing on some tips offered by experts to keep in mind while navigating the audit process.