The Internal Revenue Service (IRS) is intensifying its scrutiny of taxpayers. Following a period of economic downturn, the federal agency responsible for tax collection is now actively seeking to recover lost revenue. Individual audits surged to 1.58 million last year, marking the highest number in the past decade. The rationale behind this increase is straightforward: the federal government requires more funds. What are the implications of this for the average tax-paying citizen?

While IRS representatives often emphasize the goal of catching tax evaders through audits, the reality is that many individuals subjected to an IRS tax audit had no intention of fraud; they simply made errors. After all, the tax code is notoriously complex and undergoes frequent changes. Even seasoned professionals sometimes encounter difficulties in preparing flawless tax returns.

Despite the potential stress it may cause, an IRS tax audit does not signify the end of your financial well-being. It’s crucial to remain composed and act promptly to address the situation. Unfortunately, many taxpayers panic upon receiving an IRS tax audit notice. While responding to the notice is essential, securing proper representation before attending the audit is even more critical.

The IRS can be likened to a tenacious bulldog. They will latch on and persist until they achieve their objective, whether it’s an audit outcome or payment of back taxes. Ignoring an audit will only lead to the IRS proceeding with their findings without affording you the opportunity to defend your tax returns.

The IRS may also conduct a correspondence audit, where they make adjustments to your tax return and send you a bill. Failure to challenge audit findings or pay any resulting back taxes promptly will result in the IRS employing aggressive collection tactics. They have the authority to freeze your bank accounts, garnish your wages, and seize your personal property, including your residence. This is in addition to the numerous fines, penalties, and interest charges for late payment.

What should you do?

Attempting to navigate an IRS audit on your own is often a misstep. Many taxpayers report that IRS auditors can be perceived as arrogant, even confrontational. However, be particularly wary of auditors who appear overly friendly and empathetic, seemingly understanding your situation. Their deep knowledge of the tax code allows them to frame questions in a way that may lead individuals to inadvertently disclose information that could be detrimental. Engaging a skilled tax representative or tax advisor can fundamentally alter this dynamic and create a more balanced playing field for you.