After you get over the initial shock, there are several things you need to do. If you used someone to prepare your tax return, you should contact them to help understand the letter and the things the agent will want to see during the audit. However, most importantly the preparer can represent you at the audit.

I very strongly recommend to all audited clients that they allow us to go and represent them at the audit. Most tax preparers are experienced in representing taxpayers during an audit and will be able to provide the information the auditor needs without providing unnecessary information. We are able to deal with the IRS without the emotion the taxpayer often brings to the audit. Contrary to popular opinion, most IRS agents are reasonable people and if we can help them do their job the taxpayer will usually come out ahead in the end.

If you prepared your own return or just want to represent yourself, how do you go about preparing and conducting the audit meeting? The first thing you need to do is read the letter you received very carefully. It contains information about scheduling the appointment as well as information about what the agent is going to want to see to support your return. Don’t procrastinate setting the appointment, but pick a time that allows you to gather all the records you will need.

The audit letter will list the areas of your return the auditor wants to examine and what documents they will want to see. When I prepare for an audit I prepare a schedule for each item the auditor wants to examine. For example, if they are looking at charitable contributions I will list on a piece of paper all contributions for the year and attach any supporting documents such as receipts from the charity or canceled checks to support each item listed. I will make a copy of all these documents for the agent so they will have complete detailed support for the item claimed on the return. If you don’t have supporting documents for all of the items claimed, I include an explanation of what the transaction was and why there is not supporting documentation. Depending on the missing item, the agent may accept your explanation and not disallow your deduction.

On the day of the audit, be on time. Don’t get the audit off to a bad start by being late. When the agent begins the examination they will ask you a series of questions. Your answers should be honest and to the point. Don’t get nervous and start to answer questions that aren’t asked or just chitchat in general. Remember the agent is looking for information, don’t give them more than is called for. Be pleasant. If you act hostile and aggressive the agent may adopt the same posture with you and you then have two strikes against you before you begin. In almost 29 years of representing people before the IRS in everything from office audits to criminal investigations, I can count on one hand the number of agents with who were unprofessional in their approach to the job.

Give the agent only information they ask for. The auditor may have decided not to look at all the items listed in the initial letter so don’t volunteer records just because you have prepared the schedule. If a dispute arises over some item in your return, state your case as you see it and listen to the agent state their case, but don’t argue. Ask what IRS code section or regulation they are citing to support their position and ask if they know of any court cases that agree with them. If needed, you can request a meeting with their supervisor. The supervisor will generally be sympathetic to their agents but a fresh set of ears may lead to a different conclusion or at least a compromise. If you still can’t reach an agreement, you have the right to take your case to the IRS appeals office for further discussion of the law involved and finally you can go to court and let a judge decide who is right.

Remember what I told you first; hire a professional to represent you. You will have a better chance of getting the result you want and the money it costs will be offset by the time and emotional energy you won’t have to spend yourself.