TOP DRAWER ARTICLE

Facing an Audit?
by
HL Carpenter

Uh-oh ... you've just learned your business tax return has been selected for an audit. Even if you're certain nothing's wrong, you're probably worried - and unsure of what to expect.

Here are tips.

Audit notices can arrive by phone or letter - never by email - and the audit itself may be conducted by postal mail (a "correspondence" audit) or in-person (either a "field" audit or an "office" audit). Either way, it's a good idea to contact your tax preparer, who can deal with the paperwork, and the auditor, on your behalf.

If your return is selected for a correspondence audit, you'll receive a letter listing the documents required. You'll need to provide support for the income and deductions on your tax return.

An audit that is more involved, covers a long period of time, or requires more documentation may entail a personal visit from an auditor. You can schedule an appointment on your business premises (a field audit) or at your tax preparer's place of business. In some cases, you may want to have the audit conducted at an IRS office (an office audit).

What if you're unable to gather the information you need before your appointment? The best approach is to keep the auditor informed. You can ask to have the appointment rescheduled.

Want more detailed information? The IRS offers a free online series of videos, "Your Guide to an IRS Audit", to show you what's involved in an audit, from notification to closing. IRS Publication 1, Your Rights as a Taxpayer, also explains the audit process.

Originally published April 2011.

Last update: April 23, 2011