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Tax Tips
IRS Audits and How to Deal With Them
by InvestorGuide Staff (Write for us!)
(Click on the links within the article to get definition of that word)
Audits
An audit is an IRSexamination of
an individual or corporation's tax return, to verify its accuracy. There are three types of audits: correspondence audits (the IRS mails you a request for additional information), office audits (an interview is conducted at a local IRS office), and field audits (an interview is conducted at your place of business, for a corporatetaxreturn). Your likelihood of being audited depends on the details of your tax return, but the determination process is a closely guardedsecret, so it's difficult to reduce the chances of getting audited.
If you're audited, don't panic. Answer the IRS' questions, but don't give them more information than they ask for. You may want to consider getting professional assistance, especially for an office or field audit. If you had an enrolled agent or CPA prepare your return, you may want to bring that person to the audit. Be sure to bring to the meeting all the paperworknecessary to support your return.
Fraud
There are many legitimate ways to reduce your taxes, which are known as tax shelters, but there are also some illegal ones, often called abusive tax shelters. It is often difficult to differentiate between the two. We recommend erring on the side of caution or consulting a tax expert when in doubt.
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