Receiving an audit notice from the IRS is scary. But receiving one in the midst of a global pandemic, and at a time when your business may already be feeling the effects of that, can be even more overwhelming. Here are five things to do if you find you’re being audited during the COVID-19 pandemic.
1. First and foremost, breathe. While this is an incredibly stressful time, tax audits are a regular part of business and an experienced tax attorney can help you work with the IRS.
2. Prepare a response to the audit notice. You generally have 30 days to respond to the audit notice that will arrive in the mail. Take the time to complete the audit questionnaire you receive and submit any supporting documents with it. These may include previous tax returns, W-2 and 10-99 forms. Whether you agree with the notice of audit or not, it’s important to respond in some fashion.
3. Don’t give away too much, too soon. It’s important to give the IRS what they ask for, provide the requested documentation, and answer their questions thoroughly. But do not give the auditors any more information than they request. The IRS is auditing you because they believe they are owed back taxes or penalties from you; they’re not interested in helping you.
4. Get help from an experienced professional. Make sure to consult with a tax attorney or experienced professional before you submit documents and finalize details with the IRS. This is especially important if the audit period is during the 2020 and 2021 pandemic years, as taxes and payments were affected by COVID-19.
5. Appeal the decision if you disagree with it. After the IRS receives your audit responses, they will review and send you a decision. That will tell you if you owe taxes and penalties. If you disagree with the outcome of the IRS audit, you have the right to appeal.
Being audited by the IRS is scary, especially in the midst of the COVID-19 pandemic and the potential lack of workforce. Talk to an experienced attorney or tax professional who will help remedy the situation so that you, the taxpayer or business owner, is protected and receives the best possible outcome.
Allison Soares is a partner and tax attorney at Vanst Law. Before starting her own practice, Soares was a partner at a tax law firm where she honed her skills handling a wide variety of tax and employment-related cases. In addition to her legal work, she has worked in accounting and utilizes that knowledge to her advantage while handling cases involving EDD audits.