So you did everything you couldto avoid the IRS red flags, and you still somehow managed to get audited? Don’tfret – you can learn survival skills.

First of all, most auditssimply require that you provide additional information to the IRS. And auditsare usually done on tax returns that are a few years old.

If the letter you get fromUncle Sam specifies a correspondence audit – the least invasive and usuallylimited in scope – all you have to do is send copies of the materialsrequested.

Office audits (at your localIRS office) or field audits (at your dealership) are less common but cover moreissues and usually require a more detailed review of your business records.

Generally, if you’ve keptgood records to substantiate your income, deductions and credits, it should beeasy to assemble the necessary documentation. If you haven’t, you could be introuble.

Following are some basictips that apply to both office and field audits:

• Thoroughly review the taxreturn in question – and supporting documentation – before the scheduledmeeting. Anticipate areas that may raise questions or requests for moreinformation. If your supporting evidence is weak, arrange to have additionaldocumentation available. But don’t volunteer supplemental information unlessthe IRS raises a question.

• Make two or more copies ofall information requested – one for you and one for the IRS. Unless otherwiserequested, keep original documents in your files. Create two folders for eachquestion raised: one with the specific information requested or originallysubmitted with your tax return and the other with supplemental information thatis only used if needed.

• Focus only on the auditquestions raised; never comment about issues not identified by the IRS.

• If your accountant,attorney or tax agent prepared your return, make sure that person is present atthe audit meeting. If your return includes complicated issues or deductions,his or her professional explanations will be required.

• Don’t miss the meeting.Arrive 15 to 20 minutes early, and try to relax. Be cooperative during themeeting, and remember that yours is only one of dozens of audits the IRS isconducting. The IRS agent will appreciate a speedy resolution, and so will you.

Careful preparation for anaudit meeting will lessen your emotional stress, and probably the taxes,penalties and interest you would owe if the IRS wins. If you’ve submitted yourtax return with good intentions to stay within legal guidelines, you’ll comeout of the audit virtually unscathed – or at least with a lesson on how to filea more accurate tax return.

– Source: Tire ReviewBusiness Toolbox