IRS Audit: What Happens and How to Defend Yourself

IRS Audit Defense: How to Respond to an IRS Examination

Receiving an audit letter from the IRS can be stressful. However, audits are often simple requests to clarify or verify information on your tax return, rather than accusations of wrongdoing.

Understanding how to respond is key to protecting your financial interests. In this guide, we discuss IRS audits, their triggers, and audit defense strategies.

Audit Rule #1:
Never ignore an IRS notice. Most audit letters have strict deadlines. Missing these deadlines can lead to default tax liabilities and penalties.

Common IRS Audit Triggers

• Unusually High Deductions: Deductions that are disproportionate to your reported income.
• Unreported Income: Income listed on a W-2 or 1099 that was not included on your return.
• Losses on Schedule C: Reporting business losses year after year on a self-employed return.

Steps to Take When Audited

1. Read the Notice: Determine what documentation the IRS is requesting.
2. Gather Records: Organize receipts, bank statements, and tax forms for the year under audit.
3. Consult a CPA: Hiring an Enrolled Agent (EA) or CPA to represent you ensures you do not share unnecessary information with the examiner.

Professional representation can help resolve audits quickly. If you received an IRS notice, contact TPT Tax for professional audit defense and representation.