The Internal Revenue Service will routinely practice audits on individuals and organizations to ensure that both parties meet their tax obligations. Over the years, tax audits have gained a negative connotation due mainly to the feeling of looming wrongdoing that an investigation can trigger.
Mark Hauser is a veteran private equity investor and CPA with years of experience in both fields. He understands that IRS audits are a regular and often routine part of life when working with complex finances and are not an indicator of wrongdoing.
To help individuals better prepare for the IRS audit they have looming, Mark Hauser took some time to showcase how he helps his clients prepare.
Get Your Documents Organized
Mark Hauser believes a pristine organization can lead to competent outcomes when navigating financial complexities. Hauser advocates for a clean and organized area to store tax documents. The IRS will typically look at records from the past two years of tax returns, though in some rare instances, they may go back further. Keeping documents organized and accessible can help overcome any obstacle the IRS may throw at you.
Find Out If You Need Representation
If an IRS audit notice shows up on your doorstep or in your mailbox, you’ll need to decide whether or not to hire representation during the audit. While individuals may elect to represent themselves, Mark Hauser understands the importance of a competent financial expert in the room. Individuals looking for the most favorable outcome will want to work with a professional CPA.
Go Through the Process
While only 0.5% of filed returns are audited, it can still be scary. To get through the entire ordeal, Mark Hauesr suggests understanding the process. Private equity expert Mark Hauser suggested that an IRS audit can include up to two years of tax returns. However, significant errors may indicate the need for even older returns during the audit.
The process begins with a notice and the individual’s corresponding reply. After that occurs, the taxpayer will work with their CPA or IRS Enrolled Agent as documents are handed back and forth while being checked for accuracy. The length of the audit will depend on the complexities of the financial information and any potential issues that manifest along the way.
According to Mark Hauser, the most common documents requested by law are employment payment stubs, receipts for purchases, home mortgage statements, prior years’ tax returns, and retirement statements.