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Tax Audits - What to do if you get Audited

Updated on July 15, 2011

Getting Audited

Having your taxes audited by the Internal Revenue Service has to be up there with my top 100 things I hope never happens in life. Still, we all know that it does happen to many people every year. Besides trying to avoid ever being audited by keeping good tax records and doing your taxes well (or getting them done by a professional), what else can be done if you get audited?

First, you need to do all that is asked of you, gather up everything that can be helpful, and know your rights. Once you get the findings of the audit, you can do a couple of things. You can appeal and there are steps you can take for that. You can also take the tax case to court, but I would avoid this unless you have a very good case otherwise you may just be out more money.

Chances are, that if you get audited, the IRS will have questioned your tax return, and will ask that you produce the needed records/documentation. They will ask how you came about your findings, and most often you will end up owing them money, but perhaps you will not. That would be great news. If you feel there was some grave error somewhere, or are just intent on fighting it, that is always an option.

Appealing the findings of an audit.

When you get the findings or results back from the audit, you have the right to ask for a review of any of the findings you may disagree with. The first place to make your appeal is to the tax examiner's supervisor. After this, you make the appeal to IRS Appeals Office. For more information, look into Publication 5, which is "Appeal Rights and Preparation of Protests for Unagreed Cases." This will instruct you in the exact process that you are required to follow. If you haven't already, I would get some help from a tax professional and/or learn all I could. When it comes to representation, you are able to represent yourself, or you can have a tax professional represent you. The good news is that many appeals are able to be settled at this level. There is often a compromise reached.

Going to Tax Court

The option of going to Tax Court if need be is always an option. Some people go before they pay what the IRS is saying they owe, but you can still go to court even after you have paid. You need to know that this process is very slow and often extremely expensive. Depending on the size of the claim, the processes can vary.

If your claim that you are contesting is less than 10,000 dollars, you can opt to argue your case by yourself in Tax Court. It would be in small claims simplified procedures. You are not able to appeal the decision . When your case is involving more than 10,000 dollars, then that case is done in Tax Court. Tax Court is a federal district court or the Claims Court. It depends really on whether or not you pay the disputed amount before you bring your case. While it is allowed for a person to represent themselves, it is probably wisest to get some professional help as it will be needed. Of course the very last resort should it somehow go to this point or go that long, is the U.S. Supreme Court.

Surely, it would never come to this point, but it is good to know what to do if you or someone you know should end up in such a situation. Of course, the much better route in every way is to just obey the law and do your taxes legally and the best you can.

This video is funny but helpful.

Have you ever personally known someone that has been audited by the IRS?

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