The IRS came knocking on a friend's door, which scared the patootie out of the couple. While it's certainly frightening to open your door to Uncle Sam's representatives (and they tend to use tricky tactics), you can come out ahead of the game if you're careful and keep panicky babbling to a minimum.
Today's column features IRS approaches and what to do when you find yourself faced with an audit. Thanks to "Bottom Line Personal" for the information.
- Phone calls rather than notification letters are often utilized because they startle us into saying more than we should (i.e. "babbling"). Say nothing to the agent other than to request his or her contact info, inform the agent you're represented by a CPA or tax attorney (and, if you've not done so, immediately hire one), and your representative will contact the agent. Other than this, keep your lips zipped.
- Inflexible deadlines of 15 to 30 days must be responded to by that last date. However, all you need do is to contact the agent in writing and by certified mail asking for specifics
as to what he wishes you to do. Again, it's best your own representative (CPA or attorney) does the contacting on your behalf. The small amount you spend on this service may save you worlds of money in the long run.
- Consider a conversation somewhat like being Mirandized. In other words, anything you say can (and probably will) be used against you. Let your rep do the talking; anything you must respond to yourself, do so only in writing.
So let's assume the agent and you don't exactly see eye-to-eye; you do still have recourse.
- Ask to speak with the manager or the manager's manager - all the way up the ladder until you get someone (somewhat) cooperative. These "territory managers" usually are more reasonable and can overrule agents' decisions.
- Be sure to mail any and all replies certified mail return receipt requested. If Mr. Agent doesn't respond within 30 days, you have the right to ask for and receive free help from the IRS advocate assistance service (www.irs.gov/advocate or call 877-777-4778).
This watchdog agency often proves to be man's best friend when dealing with folks in the IRS who shuffle along or come to a dead stop - at your expense. Moreover, this agency advocating on your behalf makes agents a bit more wary.
- Ask for a face-to-face penalty reduction meeting, especially as most folks make honest mistakes that shouldn't mean any penalties, which the IRS loves to invoke. By this point in the process, it's OK to meet with the agent so he or she can listen to your (honest) explanation.