The Ten Commandments of an IRS audit
Behold, the IRS audit. They are rare these days. Only one out of every 184 taxpayers experienced one in 2017, and fewer than a quarter of them are conducted in person by the agency.
For many, navigating an audit looks as simple as parting the Red Sea. Fortunately, most are done by mail and are much less intrusive than the dreaded in-person audit where the taxpayer meets with the IRS at their office (called an office or desk audit) or at the taxpayer’s home or place of business (called a field audit).
Nine out of 10 audits end in a change to the tax return. In mail audits, the additional amount owed averages around $6,790. For face-to-face audits, the cost is much higher — taxpayers owe an additional $77,309 on average. Mail audits are fairly simple — taxpayers simply need to respond in a timely manner, in writing, to prove a few line items on their return. For office and field audits, or if the taxpayer is disputing the IRS determination in an audit, they should ask a professional to intervene.
In the meantime, for the chosen few who must deal with an IRS audit, there are some do’s and don’ts to follow — the Ten Commandments in handling an IRS audit.