If you take a deep breath and read it slowly, the audit letter you just received from the IRS will list the items the IRS wants to audit. A tax audit begins with gathering together all of the documentation the IRS wants to examine. Once this is gathered together, you will send it to us, where we will double-check every item, make sure there is nothing incriminating, and we will put it into the format required by the IRS. Then we will submit your documents with our cover letter to the IRS auditor on your case. We generally encourage our clients to send us not only the documents requested in the audit letter but ALL documents to support the entire return and its deductions on Schedules A and C. Why? Because auditors work by statistics. For example, if the documents you provide do not satisfy the auditor, he or she will often come back with additional questions about the entire return. I like to be prepared for that eventuality ahead of time, so I don’t get blindsided and so I can best represent you. This means having all of your return documentation at my fingertips.

Here’s a Golden Rule of Audits: Never EVER give the auditor your original documents. Send us copies, not originals. The reason is obvious: things get lost in the mail and things get lost by the government.

At the close of the face to face audit the auditor will issue an examination report. This is his or her suggestions about what should happen with your return. Note that his report is just that, a report, and that it is not the final authority on your tax return. The audit report must be approved by management and then it takes effect. In the meantime you will have the right to appeal and the additional right to duke it out in Tax Court. Prior to filing with IRS appeals, you can negotiate adjustments by contacting the auditor and the auditor’s group manager. Often you can agree to compromise on a reasonable settlement amount.