If you ever receive an IRS audit notice in the mail, it is important to understand what the next steps are in the process of solving your tax problem. Here is a list of steps that you should take once the notice arrives:
1. Review the Information Document Request (IDR) provided by the IRS. The IDR is a roadmap that explains the issues that the IRS agent would like to discuss with you. It is a common occurrence for the agent to not understand a few particular items on the return and will ask a lot of questions. It is a good idea to have a pre-audit discussion to reduce the information that is needed to conduct the audit with the agent.
2. Review your information carefully that you intend to provide to the IRS agent. It is vital that the information provided to the IRS agent supports the position taken on the tax return and there are no surprises.
3. Get a copy of the Market Segment Specialization Program Audit Guide. Read this guide as carefully as possible to understand how to effectively defend a position on a tax return. This guide will also explain any issues the IRS will not be able to compromise on and therefore require litigation instead.
4. Have an understanding of the procedural rules that the IRS will follow during the audit.
5. Understand that it is your right not to talk to the IRS agent unless summoned to do so. It is possible to hire a professional to handle all your communication with the IRS.
6. Prepare an audit strategy that will effectively convey your position on the return and control the information provided to the IRS agent.
7. Understand that it is important to try and resolve all issues at the IRS agent level and not push them higher up the chain of command.
8. Arrange all issues in order of priority and try to solve them one by one before moving on to the next point. If the major issues are able to be resolved, it is likely that the smaller ones will be resolved as well.
This is a basic outline of your train of thought when you happen to have an IRS audit notice show up in your mailbox. Understand that it is always beneficial to seek legal help whenever possible for these types of issues.