Navigating An IRS Audit: What To Expect And How To Prepare

In this article, you can discover…

• The financial scenarios that can trigger an IRS audit.
• How to respond to an IRS audit notice.
• How an experienced tax attorney can help you navigate an audit.

What Triggers An IRS Audit In North Carolina Or South Carolina?

IRS audits are relatively rare, but certain factors can increase the chances of having one conducted. Audits can occur randomly due to discrepancies in your tax return or because of red flags that capture the attention of the IRS and cause it to shift its scrutiny on you.

One of the most common triggers is unreported income. The IRS receives W-2s, 1099s, and other income records, and discrepancies between these records and your reported income may lead to an audit. Other mistakes, such as misapplied Social Security numbers, can also raise concerns with the IRS.

Certain deductions and credits can attract the attention of the IRS. Earned Income Tax Credit claims are closely scrutinized due to past fraud. High mileage deductions, home office deductions, and excessive Schedule C expenses, especially for cash-based businesses, may also raise red flags.

While some deductions increase audit risk, accurate documentation ensures compliance and protection in case of an IRS review. Keep this in mind throughout the year to avoid speed bumps during tax season. If you fail to, don’t hesitate to reach out to an IRS audit attorney in North Carolina or South Carolina to help mitigate any risks you may face.

How Will I Be Notified Of An Audit?

IRS audit notices in North Carolina and South Carolina are sent to the last known mailing address of taxpayers. Notices of audits are sent by physical mail; they do not call, email, or send text messages regarding audits. If you receive an unexpected call or email claiming to be from the IRS, it is likely a scam.

If you have moved recently and haven’t updated your address, you may not receive the notice in a timely manner, which could cause issues. To avoid this, ensure your mailing address is always up to date with the IRS.

How Should I Respond To An IRS Audit Notice?

For starters, do not ignore the notice. The worst thing you can do is fail to respond. Doing so can lead to more serious consequences. Read the notice carefully to understand what the IRS is auditing and what documents they need.

The notice will include a deadline to respond, so be sure to reply within that timeframe. If you need more time, you can request an extension or inform the IRS that you are seeking professional assistance.

You have rights under the Taxpayer Bill of Rights, including the right to representation. If you’re unsure how to proceed, consider consulting a tax attorney in North Carolina or South Carolina or a CPA to help navigate the audit process.

What Documents Should I Gather For An IRS Audit?

The IRS notice of exam will outline the specific documents required. It may instruct you to call for details or provide a list of requested records.

Only gather and submit the exact documents requested—providing unnecessary information could expand the scope of the audit. Commonly requested documents may include tax returns, W-2s, 1099s, bank statements, receipts, and mileage logs, depending on the audit’s focus.

If you speak with a Revenue Agent, take notes on what they ask for and provide only what is necessary. Keeping responses concise and focused can help limit the audit to the original inquiry.

Why Should I Hire An Experienced Tax Attorney Rather Than Handling An IRS Audit Myself?

Hiring a tax attorney can do a lot to alleviate the stress, time commitment, and anxiety you’re likely to experience when facing an IRS audit. An attorney will negotiate on your behalf, ensuring you receive the best possible outcome while avoiding common mistakes that could worsen your situation.

For complex tax issues or cases involving significant financial stakes, legal representation is incredibly valuable. If there’s any risk of tax fraud allegations, an attorney provides critical legal protection and can help prevent serious consequences.

An experienced attorney will communicate with the IRS for you, ensuring you comply with deadlines and respond effectively—giving you peace of mind during the audit process.

What Are Some Common Mistakes Made During Audits, And How Do You Help Clients Correct Them?

One of the biggest mistakes taxpayers make during an IRS audit is admitting wrongdoing or volunteering unnecessary information. Saying that you intentionally left something out or knew you made an error can lead to serious consequences, including a referral to the IRS Criminal Investigation Division.

Another mistake is providing too much information beyond what the IRS requests. Unnecessary disclosures can expand the scope of the audit and increase tax liability. It’s essential to be concise and answer only what is asked.

I advise my clients on how to communicate with the IRS, ensure they understand their rights, and, when necessary, step in to represent them in an attempt to steer them clear of these issues. Hiring an experienced tax lawyer in South Carolina can help protect against legal risks and ensure the best possible outcome.

Still Have Questions? Ready To Get Started?

For more information on IRS audits in North Carolina, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (803) 797-4600 today.