Make us your home page

What if you get audited?

The April 15 tax deadline is now receding in our collective rear view mirror, unless, of course, you are audited by the Internal Revenue Service.

In general, the likelihood of being audited is low. But audits have been on the rise in recent years as the IRS tries to boost revenue, said Bill Smith, managing director at CBIZ MHM, a national accounting and consulting firm.

There are several different kinds of audits, Smith said.

Correspondence audits are conducted by mail, and generally relate to a specific item on your return, or small dollar amounts. With a "desk" audit, you may have to go to an IRS office and meet with a revenue agent. An "office" audit, in which the IRS comes to you, is generally just done for businesses.

Typically, you'll learn your return has been selected for an audit when you receive an "information document request" in the mail. The request will specify what documents the agency is requesting and will state the deadlines for providing them.

Smith said if you haven't been working with a tax professional, you might want to retain one if you have been selected for audit. Even if the issue raised in the audit is relatively simple, and you have all the relevant documentation requested, there are procedural hurdles and deadlines that must be met to help things go smoothly.

"Be honest about whether it makes sense to hire a professional," he said. If you've prepared your own return, and the agency is making a simple request for, say, receipts for a charitable deduction — and you know you have them — it may be fine to handle it on your own. But if the amount in question is large, or the tax issue complex, think hard before handling it yourself.

"What you don't want to do is go in, make mistakes, get a giant bill from the IRS and then contact a professional to say, 'Get me out of this,' " he said.

For help in finding an accountant or a tax lawyer, some professional organizations have tools that let you search by ZIP code: The American Institute of Certified Public Accountants and the National Association of Tax Professionals are two of them.

If you respond to the letter on your own, make sure your documents are in order — no receipts in shoe boxes — and submit only as much information as is needed to answer the request.

If you have taken an aggressive, but defensible, position on a tax issue, make sure you are prepared to make your argument.

If you provide the requested information and the IRS decides to impose a "deficiency," or an amount owed, you have options. You can agree with the finding, at which point the agency will assess the deficiency and collect it.

If you disagree, you usually have 30 days to protest. You'll then have a conference with the appeals office within the IRS, which is supposed to act in a nonpartisan way to consider your appeal.

If the agency still thinks the money is owed, you can again disagree, which will usually set off a "90-day" letter, or a statutory notice of deficiency. You'll then have 90 days to file a petition with the United States Tax Court.

If you want to consider tax court, he said, weigh the cost of legal representation with the amount the agency says you owe. If amount is manageable — say, the IRS says you owe $1,500 — you can try to fight on your own, since hiring a good tax lawyer may well cost $1,500 or more.

One bit of good news: Excepting cases of outright fraud, being audited doesn't increase your chances of future scrutiny, Smith said. There is no "naughty" list.

What if you get audited? 05/12/13 [Last modified: Sunday, May 12, 2013 5:19pm]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, New York Times.

Join the discussion: Click to view comments, add yours

  1. Trigaux: Tampa Bay household income tops $50,000 but still makes us look poor

    Personal Finance

    The good news is Tampa Bay's median household income finally crawled above $50,000 last year. The bad news is that figure — officially $51,115 by new U.S. Census Bureau data — still puts the Tampa Bay region as the poorest of the nation's 25 largest metro areas.

    Tampa Bay still has the lowest median household income among the 25 most populous metro areas, according to U.S. Census Bureau data.
  2. Make-A-Wish Foundation aims to help more kids in Tampa Bay


    The Make-A-Wish Foundation is on the lookout for sick children in the Tampa Bay area who need a once-in-a-lifetime pick-me-up.

    Grace Savage, a 10-year-old girl with a chromosomal disorder made a trek to the Clearwater Marine Aquarium last year, courtesy of the Make-A-Wish Foundation. The foundation intends to beef up its presence in the Tampa Bay area after a reorganization. The region is now the responsibility of the foundation's Southern Florida chapter, one of the most active in the country, with more than 11,000 wishes granted so far. [JIM DAMASKE   |   Times ]
  3. Florida hides details in nursing home reports. Federal agencies don't.


    TALLAHASSEE — Gov. Rick Scott widened his offensive Thursday against the Broward nursing home he blames for the deaths of 10 residents by setting up a tip line for information, but when it comes to access to the inspection reports of all nursing homes, the governor's administration has heavily censored what the …

    In the foreground is a document detailing the findings of a Feb. 2016 inspection at the Rehabilitation Center at Hollywood Hills obtained from a federal agency, the Center for Medicare and Medicaid Services. Behind it is the state?€™s version of the same document, from the Agency for Health Care Administration, showing how it has been redacted before being released to the public. [Miami Herald]
  4. 'Toxic' times: How repeal of Florida's tax on services reverberates, 30 years later

    State Roundup

    TALLAHASSEE — Long before Hurricane Irma attacked Florida, the state faced a troubled fiscal future that the storm will only make worse.

    Robertson says the tax debate is now “toxic.”
  5. Fewer Tampa Bay homeowners are underwater on their mortgages

    Real Estate

    The percentage of Tampa Bay homeowners underwater on their mortgages continues to drop. In the second quarter of this year, 10.2 percent of borrowers had negative equity compared to nearly 15 percent in the same period a year ago, CoreLogic reported Thursday. Nationally, 5.4 percent of all mortgaged homes were …

    The percentage of Tampa Bay homeowners underwater on their mortgages  continues to drop. [Times file photo]