Dealing with taxes every April is bad enough. One thing that can make tax-related stress even worse is getting a notice that you are also the subject of an audit by the Internal Revenue Service (IRS).
There are steps you can take now that will make it much easier to navigate an audit.
What can I do to prepare for an IRS audit?
Four proactive steps that will help in the event of an audit include:
- Keep good records. Take the time to organize your records. Keep copies of previous tax returns, records and receipts.
- Report all assets. Make sure to report any offshore accounts. The IRS has taken serious steps to prosecute those who have failed to report foreign assets and, in some cases, even pushes for imprisonment. Avoid these penalties by being forthright with all your assets. The days of safely hiding assets in the Cayman Islands are gone.
- Use professionals. There are some jobs that are best left to the professionals. Filing taxes is often one of them. Getting representation if audited is another.
- Avoid listed transactions. Listed transactions are those that the IRS deems to be similar to tax avoidance methods. One common example is the use of tax shelters.
These steps will help better increase the odds of a successful outcome in the event of an audit.
What if I get notification of an audit?
As noted above, it is wise to seek professional assistance if you receive notification of an impending audit. An attorney experienced handling IRS audits can work to protect your interests during the process.