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November 23, 2011 by msquaredlaw

The IRS and the Florida Department of Revenue audit hundreds of thousands of tax returns every year.  Although that represents but a small percentage of all returns filed, this is little consolation if your return is among those selected for audit.  But with proper preparation, planning and adequate representation, you can minimize the potential headache caused by a tax audit and increase your chances of obtaining the most favorable result.

Types of IRS Audits.

An IRS examination may be conducted by mail or through an in-person interview and review of your tax records.  Examinations not handled by mail can take place in your home, your place of business, an IRS office, or the office of your tax professional.  If the time, place, or method that the IRS schedules is not convenient, you may request a change with the IRS agent to try and work out something more suitable.

What To Do if You’re Being Audited.

One.  Hire a Tax Attorney.

It is usually advisable to have a tax professional represent you at a tax audit.  Your previous tax preparer may not be the one best qualified to represent your interests.  A tax attorney knows what issues the IRS agent is likely to focus on and can prepare accordingly.  More importantly, a tax attorney knows that in many instances IRS agents will take a position (for example, to disallow deduction of a certain type of expense) even though courts have expressed a contrary opinion on the issue.  Because your tax attorney will know and can point to the proper authority, the IRS agent may be forced to throw in the towel or, at the very least, waive assessed penalties.

You can get your tax attorney involved at various stages of the tax audit process.  Whether you come to us immediately upon getting contacted by the IRS or contact us after dealing with the tax audit on your own or with your accountant and becoming overwhelmed with the process, we can assist.  However, the best results are achieved when the client contacts us as early as possible.

Two.  Be Prepared.

The easiest way to survive a tax audit is to prepare for one in advance.  On an ongoing basis you should systematically maintain documentation—invoices, bills, cancelled checks, receipts or other proof—for all items to be reported on your tax return.  Keep all your records in one place and hold on to your calculations.  You can facilitate matters by keeping the necessary records arranged in an orderly and systematic fashion for presentation to the IRS agent when asked.

Three.  Be Courteous and Responsive.

The typical examining agent is experienced and skilled.  Being evasive or nonresponsive or trying to outsmart the agent is likely to create friction and raise suspicions in the agent’s mind.  Communication is vital.  However, do not give the examining agent any documents not asked for and do not volunteer any information not asked!  T.M.I. can only hurt you!

If you are facing a tax audit or simply want to improve your recordkeeping practices in case the IRS or the Florida Department of Revenue selects your return for examination, we are available to assist you.

Muiños & Morales


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