Avoiding Costly Audits

Will a beefed-up IRS mean an audit for you? How to avoid costly actions.
September 08, 2022
BY TOBY MATHIS – Special to Florida Weekly

ONE PROVISION OF THE INFLATION Reduction Act is to increase funding for IRS enforcement, which will include hiring around 87,000 new agents. The extra revenue stemming from additional tax audits is projected to lower the deficit by more than $200 billion over the next decade.

With more employees, the idea is the IRS can focus more on high-income earners and ensure they aren’t dodging taxes. So if you get a notice in the mail from the IRS, what should you do? And what can you do to avoid IRS actions or an audit? I got together with CPA Jeff Webb and came up with some easy-to-follow rules:

¦ Don’t ignore it. The problem will not go away by itself. If you ignore an IRS audit of any kind — mail audit, office audit, field audit — several things can happen, none of them particularly good for you. But don’t panic. Read the notice carefully to determine why you received it. Sometimes it’s informational rather than adversarial. If you don’t understand the notice, contact a CPA to help you deal with it.

Also, be careful when trying to resolve the notice yourself. You only want to provide the IRS the information that they need to close your case and move on. My suggestion is not to try to communicate with the IRS yourself; you might find yourself being questioned without really knowing the ramifications of your answers. Always use a professional to communicate with the IRS, even if the issue seems mundane.

¦ Make sure that your tax return is complete and accurate. You can avoid all the headaches just by doing the right thing from the outset. Along with filling out your tax return thoroughly and to the best of your knowledge, keep good records of everything you’ve reported.


Send this to a friend