There are few situations in life that are quite as terrifying as a tax audit. Even if you’ve done all the right things, the prospect of explaining your tax deductions to an IRS officer may leave you in a cold sweat. That’s understandable. There are protocols and protections in place for you, though.
Your rights as a taxpayer are outlined in a document called “Your Rights as a Taxpayer,” which is IRS publication number one. You have the right to confidentiality, for example. You have the right to representation. Most importantly, in this case, is the right to be informed. The right to be informed does not mean you are immune to unexpected IRS visits, though.
TL;DR (Too Long; Didn't Read)
An IRS officer can come to your home or business uninvited. This is rare, though, and you should confirm whether the agent is a legitimate IRS representative.
Can an IRS Officer Come to Your Home Uninvited?
An IRS officer can come to your home or business without an invitation. This is a relatively rare occurrence, though. If someone claiming to be an IRS officer comes to your home or business, you should verify whether she is a legitimate representative. All legitimate agents will have an HSPD-12 card, which includes an IRS agent ID number. You can call the IRS to confirm that the agent is legitimate.
Legitimate IRS visits generally arise from three situations. If you or your business owes a significant amount of taxes, IRS revenue officers may visit. IRS investigators may visit unannounced while conducting an investigation. In the case of an audit, you will always be notified about the audit via mail. An agent may call you to confirm the appointment, but the agent conducting the audit will not normally visit without scheduling an appointment.
If you’re wondering, “Will the IRS call you?” the answer is sometimes. The IRS can call to collect a tax debt. This only happens after they send you a letter, though. They will not demand immediate payment or payment using gift cards or wire transfers. If you are uncertain about the legitimacy of an IRS call, you can call the IRS to confirm whether you were contacted by a legitimate representative.
Exceptions to IRS Audit Visits
Some IRS audits are conducted entirely by mail. The IRS sends a letter, and you send back a response. If they are satisfied with your response, no further action is required. In the case of an in-person audit, you can work with the auditor to schedule a time that is convenient for you. If you need an extension to prepare, you can contact the auditor or the auditor’s manager.
Preparing for IRS Audits for Your 2018 Taxes
IRS audits typically happen within three years, so your 2018 income tax returns, which are filed in 2019, can be audited as late as 2022. The IRS will usually only go through the past three years of tax returns, but if they find a substantial error, they may go back as far as six years.
The best preparation for an audit is to keep all the documents you or your tax preparer used to complete your returns. As you file your 2018 taxes, keep all the documents you use someplace safe for at least six years. Make sure that you have documentation for any deductions you take and that you report all of your income.
Preparing for IRS Audits for Your 2017 Taxes
Audits for 2017 taxes, filed in 2018, may start as early as 2019. The IRS is performing fewer audits now than it has in the past due to budget cuts. For example, 934,000 returns were audited during the 2017 fiscal year, which is the lowest number since 2003 according to IRS data.
If you are concerned about being audited, make sure you have all the documents you used to prepare your 2017 tax return. You should keep receipts, bank records and credit and debit card statements that confirm your purchases. If you receive a notice that you are being audited, read the notice carefully and respond with the appropriate documentation. If you are nervous about representing yourself, you do have the right to representation during an audit. You can have an accountant, lawyer or anyone else you trust speak on your behalf.
- IRS: IRS Audits
- IRS: IRS Provides Tips on Determining If It’s Really The IRS At Your Door
- IRS: How to Know it’s Really the IRS Calling or Knocking on Your Door
- IRS: Your Rights as a Taxpayer
- IRS: Enforcement and Services Results Fiscal Year 2017
- Kiplinger: How to Handle an IRS Audit of Your Tax Return
Melinda Hill Sineriz is a freelance writer with over a decade of experience. Her work has appeared on Pocket Sense and Sapling. She specializes in business, personal finance, and career writing. She has worked in insurance sales and financial planning, helping families to manage their money and prepare for the future. Learn more about her and her work at thatmelinda.com.