5 tips for surviving an audit

If you are being audited, don't panic. Be prepared and know your legal rights.

1. Do your homework.

Before you go into the auditor’s office, get organized. Get all your papers together. Go over your return carefully. Become very familiar with it. Find and organize the supporting documentation for each item on your return. Make copies of your documents to bring with you to the audit.

Be sure that you understand the auditor’s letter. If the letter mentions specific issues that the audit will be focusing on, prepare yourself especially well for those issues.

2. Be polite.

Don’t make a bad situation worse by being rude, visibly angry, or confrontational. If you’ve ever learned any stress reduction techniques, this would be a good time to use them. If you feel you may be on the verge of losing control, try taking slow, deep breaths.

3. Don’t say more than is necessary.

Answer all the questions as best you can, but don’t volunteer any more information than you have to. If a question calls for a yes or no answer, just say “yes” or “no,” and then stop talking. If you are asked to supply details, then do so, but confine yourself to addressing the specific items asked in the question.

Imagine you were in a courtroom, sitting in the witness box, being cross-examined by the other side’s attorney. In that situation, you would listen carefully to what was being asked, and you would answer the precise question, no more and no less. Do the same thing in the auditor’s office, and you’ll be fine.

You should also be careful not to hand over more documents than you’ve been asked for. Give the auditor whatever documents he or she requests, but no more than that.

4. Consider hiring a professional.

You can hire a tax attorney, a certified public accountant, or an enrolled agent to accompany you to your audit. The professional may even be able to handle the audit for you, while you stay home.

The professional’s in-depth knowledge of the tax laws, and his or her experience with the audit process can be very useful. In addition, many people find that just knowing that they have a professional helping them can make the audit experience significantly less stressful.

On the other hand, you’re not required to use a professional. The choice is yours.

In general, the more complex the issues involved in the audit, the more you should consider hiring a professional.

5. Know your rights.

You have the right to request to talk to the auditor’s supervisor. You can do this at any time during the audit if you feel the auditor is being uncooperative. You can also ask to talk to the supervisor after the auditor has given his or her final decision.

If the supervisor upholds the decision, you can appeal the decision at the IRS Office of Appeals. About 85% of the decisions that are appealed to the Office of Appeals are settled there. However, if you are not able to reach a satisfactory settlement, you have the right to a trial in the U.S. Tax Court.