Receiving a notification of an IRS audit can be a nerve-wracking experience for anyone.
However, it is important to keep a cool head and approach the situation with a clear strategy, avoiding certain pitfalls that could lead to extra hassle.
1. Ignoring the notification
One common mistake individuals make is ignoring the IRS audit notification. This can lead to serious consequences. Ignoring the situation will not make it disappear. In fact, it may worsen the outcome. Responding promptly is necessary to demonstrate cooperation and a willingness to resolve any discrepancies.
2. Altering documents
Some individuals may want to modify or create documents to present a more favorable financial picture. This is a risky move that can result in severe penalties. The IRS is adept at detecting inconsistencies, and attempting to manipulate documents will only exacerbate the situation. It is best to provide accurate and truthful information.
3. Providing incomplete information
Another misstep to avoid is providing incomplete information to the IRS. Failing to provide all relevant documents or omitting important details may raise suspicions and prolong the audit process. Be thorough and transparent in your response, ensuring a timely delivery of all requested information.
4. Avoiding communication
Communication is key during an IRS audit. Avoiding or delaying responses to inquiries can create a negative impression. It is important to maintain open and clear communication with the IRS throughout the audit process. If you need more time to gather information, inform them promptly and request an extension if necessary.
The IRS takes its jobs seriously. In FY 2022, the governmental agency conducted 708,309 tax return audits. Although it can seem stressful, taking a proactive and honest approach is your best ally in navigating these challenging waters.