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Help, I'm Being Audited!
Tips for Surviving an IRS Audit By Deborah Ng
When Lisa Keene received a notice from the IRS informing her of an audit, she started to panic. After she caught her breath, she called her accountant and read the notice to him. "You know, it really wasn't too bad," says Keene, a freelance writer from Central New Jersey. "All they wanted was for me to send the backup paperwork for some of my home office deductions. I can't tell you how relieved I was."
Keene was fortunate. For many others, an audit can take months or years to clear up.
Why did the IRS choose Keene for an audit? It could have been one of several factors. For instance, she recently left her full-time job to work at home. In addition to the drastic change in income, her tax return showed many itemized deductions. Even though they were legitimate business expenses, they still raised a red flag. Keene acted correctly, though. By calmly calling her tax professional and doing everything the letter asked, she completed the process quickly and painlessly.
What is the first thing one should do upon receiving notice of an audit? "She should call the IRSat the number provided on the IRS notice letter and request an extension of time to respond to the request," says Nash. "This will give her time to gather her records and develop an appropriate response. Typically, the IRS will grant an automatic extension up to another 30 days on the first request."
