While surviving an audit can feel like a huge relief, it’s important to understand what comes next.
This blog post would walk readers through the follow-up steps and procedures that occur after an audit is completed – from potential appeals or negotiated settlements to continuing compliance measures. It would link to the IRS Audit Process Timeline as a resource for understanding the wider context of the audit process and the steps that taxpayers need to take.
After an IRS audit, the last thing you want to do is sit and wait. The tax authority has examined your financial records, and now comes the next part, where you wait for the decision. But what happens after an IRS audit? After the hustle of collecting paperwork and submitting them to the tax body, what next? In this blog post, we share insights and tips on what happens after an IRS audit and what to do next.
First Things First, What Is An IRS Audit?
Before we get into the details of what occurs following a review by the Internal Revenue Service, let us first define an IRS audit. An audit is an examination of someone’s or an entity’s financial records to ensure that the taxes incurred are correct. The Internal Revenue Service can single out a particular individual’s taxes or accounts to inspect, to evaluate claims, deductions, and earnings precisely.
What Happens After An IRS Audit?
The audit process by the IRS takes some time and may not be quick. During the audit, the auditor will ask for a list of records to review. By reviewing the records, they can get a better understanding of your finances and identify discrepancies they want to discuss with you. No new information was added.
After the audit is completed, the IRS auditor will inform you of two potential results. The first outcome is that your tax returns have been accepted as they were filed, indicating that your financial records are correct and that you don’t owe any IRS tax penalties. This is positive news.
The second outcome is that there are changes that need to be made to your tax returns. This means that the IRS auditor has found discrepancies in your financial accounts that need to be corrected. In this case, the auditor will propose adjustments and will share them with you. You can choose to either agree or disagree with the changes proposed, but before you do that, it’s essential to review the proposed adjustments carefully and get professional guidance from an accountant or a tax attorney.
What Happens After You Agree With The Changes Proposed?
After you’ve agreed to the proposed changes, the auditor will share the tax bill with you. The IRS will also share the payment plan with you, outlining how to pay the tax penalties assessed to you. It’s essential to act fast on this because failure to pay the tax penalties can escalate and become more challenging to handle. The payment plan will outline the amount to be paid, the payment due date, and the interest applicable to late payments.
What If You Disagree With The Changes Proposed?
If you disagree with the proposed changes, there’s room for negotiation with the IRS. You can provide additional information supporting your tax returns, and the IRS will review your submission to ascertain whether to uphold their proposed changes or not. It’s essential to have professional guidance as you go through the appeal process to ensure you have a higher chance of success.
In conclusion, an IRS audit can be nerve-wracking, but it’s essential to know what to expect. After an IRS audit, it’s essential to act fast once the auditor shares their conclusions, whether you agree with the changes proposed or not. Seek professional guidance and act fast to comply with the IRS’s requirements, such as paying the tax penalties assessed to you. With the right guidance, you can overcome the tax hurdles and continue to thrive in business or personal finance.
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