#IRS Can you cure a reporting error during an audit?

You hopefully read our recent post on the Taxpayer's Bill Rights. Well, the flip side to that coin is the power of the IRS to regulate how taxpayers must report item, or comply with the law. Congress has given the IRS wide latitude in deciding how to enforce reporting and compliance of various items. Like an ambivalent parent, sometimes the IRS says "you (the taxpayers) must report (fill in the blank) in this manner."

Just like a parent with a young child, sometimes the requirement is "I mean it", other times its "I really mean it.", and others "I triple mean now!!!". 

The lesson here goes back to something we preach over and over - the key to success in an audit is preparation and then more preparation. Don't get into a situation where you are rushed into an audit. Review the document request, speak with the auditor, review the client files. Candidly speak with the auditor about your plans. Consider amending a return if needed before the audit actually begins. 

Doing as much work for the auditor - preparing easy to follow summaries and supporting schedules for the auditor usually buys you a few grace points. Spend them wisely. 

As you can expect, the worst audits, both for the representative and the client, are the ones where the client acknowledges he has no supporting documentation and is throwing themselves on the mercy of the auditor. You are chum in the water and its not going to turn out well for the client. 

The lesson is to identify reporting shortfalls early and prepare your way out of any potentially bad consequences. 

We'd love to hear your questions and comments at austin-tax-help.com.

#IRS #Taxhelp

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