Wednesday, July 23, 2008

What You Should NEVER Bring To An IRS Audit

The most common audit mistake is providing copies of your other years' tax returns. Doing so greatly expands audit risk by giving the auditor many things to look at that he otherwise would not see, like patterns of income and deduction amounts over multiple years.

So why do people bring previous year's returns with them? Because the audit notice asks them to!

But here's something you should know:

IRS rules state that you are required to provide only the information relating to the specific tax year listed in the audit notice. You are not required to provide information relating to any other tax year, except as it might relate to the year under audit-as carryover items might.

If the auditor asks you for a previous return, simply say, "I don't believe that this relates to the year or issues being examined." Almost always, that will end matter.