How to Survive a Financial Audit
Most people would count a tax audit among the scariest things you can face in your financial life. Often, they feel as if they're being accused of doing something wrong or criminal, which can lend an atmosphere of panic to the audit.
In reality, many audits are the result of an error, often made by the IRS. The purpose of the audit is simply to rectify the mistake. Nevertheless, it can be a daunting prospect, so here are some tips to surviving with your nerves, and your tax bill, intact.
Be Nice
People who are being audited may often feel resentful towards the auditor, as if they are being picked on or singled out. This can make them lash out at the auditor, complaining about the wasted tax dollars or excessive paperwork involved in filing your tax return.
Unsurprisingly, this is likely to make the auditor dislike you from the very beginning and inevitably, if they don't like you, they're less likely to be lenient about any discrepancies they might find. So keep your opinions to yourself, and treat them like any other person, in a polite and courteous manner.
Keep To The Point Of The Audit
When you are called for an audit, the auditor will have questions about certain specific areas of your tax return, rather than the entire thing. This means that you need only discuss those parts - do not bring up other, unrelated areas, as you may find that you end up inadvertently uncovering other discrepancies that the auditor hadn't originally spotted.
Of course, once you mention them, he or she will be obliged to investigate them, so you may end up causing yourself even more trouble.
Don't Argue
If your auditor makes a point that you don't agree with, state your case clearly and calmly to see if you can persuade them round to your way of thinking. If they still do not agree with you, don't get into a fight with them. Their word is final, so bite your tongue and accept their decision. If you really feel very strongly that they've made the wrong decision, you can take your complaint to more senior staff, or even to court, but be aware that this can be a long, drawn-out process.
Don't Be Afraid
Although it is easy to see a tax auditor as some kind of superbeing when it comes to financial law, this is often not actually the case. Because of the stresses of the job, not to mention the difficulties of having to visit people who already don't like you before you even step through the door, staff turnover can be quite high. As a result, many auditors are newly-qualified students whose knowledge of the intricacies of the tax system leaves something to be desired.
In such a case, you may in fact know more than them, so don't be afraid to point out areas that you feel are incorrect. Just remember to be polite when you do so - most people don't like having their expertise called into question, so doing so in an aggressive manner is unlikely to help your cause.
By following the steps above you will hopefully find that your tax audit isn't as scary as you'd first hoped. Do your best to work with the auditor rather than against him, and you should be able to come to a conclusion that leaves you both satisfied.
Most people would count a tax audit among the scariest things you can face in your financial life. Often, they feel as if they're being accused of doing something wrong or criminal, which can lend an atmosphere of panic to the audit.
In reality, many audits are the result of an error, often made by the IRS. The purpose of the audit is simply to rectify the mistake. Nevertheless, it can be a daunting prospect, so here are some tips to surviving with your nerves, and your tax bill, intact.
Be Nice
People who are being audited may often feel resentful towards the auditor, as if they are being picked on or singled out. This can make them lash out at the auditor, complaining about the wasted tax dollars or excessive paperwork involved in filing your tax return.
Unsurprisingly, this is likely to make the auditor dislike you from the very beginning and inevitably, if they don't like you, they're less likely to be lenient about any discrepancies they might find. So keep your opinions to yourself, and treat them like any other person, in a polite and courteous manner.
Keep To The Point Of The Audit
When you are called for an audit, the auditor will have questions about certain specific areas of your tax return, rather than the entire thing. This means that you need only discuss those parts - do not bring up other, unrelated areas, as you may find that you end up inadvertently uncovering other discrepancies that the auditor hadn't originally spotted.
Of course, once you mention them, he or she will be obliged to investigate them, so you may end up causing yourself even more trouble.
Don't Argue
If your auditor makes a point that you don't agree with, state your case clearly and calmly to see if you can persuade them round to your way of thinking. If they still do not agree with you, don't get into a fight with them. Their word is final, so bite your tongue and accept their decision. If you really feel very strongly that they've made the wrong decision, you can take your complaint to more senior staff, or even to court, but be aware that this can be a long, drawn-out process.
Don't Be Afraid
Although it is easy to see a tax auditor as some kind of superbeing when it comes to financial law, this is often not actually the case. Because of the stresses of the job, not to mention the difficulties of having to visit people who already don't like you before you even step through the door, staff turnover can be quite high. As a result, many auditors are newly-qualified students whose knowledge of the intricacies of the tax system leaves something to be desired.
In such a case, you may in fact know more than them, so don't be afraid to point out areas that you feel are incorrect. Just remember to be polite when you do so - most people don't like having their expertise called into question, so doing so in an aggressive manner is unlikely to help your cause.
By following the steps above you will hopefully find that your tax audit isn't as scary as you'd first hoped. Do your best to work with the auditor rather than against him, and you should be able to come to a conclusion that leaves you both satisfied.
No comments:
Post a Comment