What if I get audited?

By Ken McEntee

Although the average person’s odds of being audited by the IRS are about one half of 1 percent, an audit can be frightening even if you think you’ve done everything right on your tax return, cautions Gary Cerasi, CPA, owner of Creative Business Strategies.

Here, Gary explains how to avoid trouble with the IRS.

Q: What is an audit?
A: The IRS has several types of audits, from a random check of the accuracy of your tax return to a fraud audit. The latter is serious—call your criminal attorney.

Q: Why would the IRS audit me?
A: You can be chosen at random, something on your return may cause suspicion, or somebody may have reported you—possibly a former spouse or a disgruntled employee.

Q: How can I reduce my chances of being audited?
A: Report all your income and don’t overstate your expenses. Have a reputable CPA review your return before you file.

Q: What should I do if I am audited?
A: Hire a tax professional who is familiar with audits and give them power of attorney to represent you—then you never have to talk to an IRS agent. Gather all the receipts and other documents you used to prepare your return. If you represent yourself, show up organized and be polite to the auditor. Say only what is necessary to answer a question.

Q: What’s the penalty if I lose?
A: Prison is usually possible only in criminal cases. Most cases are civil but can carry heavy financial penalties.

Q: What about those audit defense services advertised on the radio?
A: I don’t trust them. Always go to a reputable expert who you know personally or who is recommended by somebody you trust.

You can learn more by scheduling a no-cost consultation with Gary, at 440-546-9359. Creative Business Strategies is located at 192 East Wallings Road, in Broadview Heights. You can learn more at CreativeBizStrat.com.