Audit Basics: Documents You Might Need for an Audit

Receiving notice of a tax audit from the Internal Revenue Service (IRS) is not unusual but usually triggers concern. Understanding what you might need for an audit can quell some of the anxiety when you get an IRS audit letter in the mail.

We talked recently about the process around an IRS civil tax audit. Part of that process requires you to provide information and documents to the IRS. The IRS may be focused on a particular issue or finding in a tax return, or it may be interested in a broader sweep of your business interests. The audit focus determines the documents you will need to provide.

In addition to the statements you make to the IRS, the documents you provide can offer important evidence in support of—or against—your position. If the IRS is probing a complex portion of your return, or your business, it makes sense to speak with a tax attorney experienced in IRS audits before you talk to the IRS or give over your documents. If you know that you may have employment tax issues, fraudulent deductions, or a second set of accounting books—speak with a tax lawyer as soon as you receive the audit letter.

The IRS assumes you have the records they request readily available. Organizing records before they are provided to the IRS makes good sense. It should go without saying that you provide only copies of documents to the IRS—no originals. It is a good idea to create a summary sheet to accompany your materials to help you respond to questions and offer an easy review experience.

The IRS may request a wide variety of materials, some of which could include the following:

• Legal documents:  The IRS may seek civil records regarding divorce, property, or business matters. Records related to criminal allegations or investigations are likely as well.
• Receipts: Most taxpayers understand the IRS will be looking for validation for deductions and other facets of a tax return. Organize bills, receipts, and records of canceled checks by date and note their relevance to your returns.
• Evidence of loss: If you suffered theft or significant loss, be sure to include insurance documents, legitimate appraisals, and police reports.
• Banking documents: Be prepared to explain and turn over financial documents and statements. These might include detailed loan documentation, including loans not made from traditional financial institutions. Include terms, purpose, and the names of those involved in the transaction.

These are just some of the categories of documents the IRS may request. Review the audit letter you receive to learn if yours will be a correspondence audit by mail, or if you will be required to appear in-person at an appointment with your documents. When in doubt? Speak with a tax professional.

Concerned about an audit letter? Speak with our tax attorneys

Serving local and international clients, the legal group at Robert J. Fedor, Esq., LLC delivers experienced representation to individuals and businesses regarding compliance issues, tax audits, and offshore tax concerns. Call 800-579-0997 or contact us online today.