Answering Common IRS Audit Questions: Part 2

Facing an IRS audit can be challenging, but having the right information can help alleviate concerns and ensure a smoother process. 

John Milikowsky, founder of Milikowsky Tax Law, shares expert insights and answers to common questions about IRS audits:


Let’s get started and shed light on some key inquiries.

Do I Have to Provide All Records Identified in the Audit Letter?

Providing comprehensive records is crucial, especially for expenses like mileage, travel costs, or inventory. Ensuring thorough documentation substantiates claims and helps prevent the disallowance of expenses by the IRS.

What Happens if I Ignore the IRS Audit?

Ignoring IRS audit requests can lead to significant consequences, such as the disallowance of all claimed expenses. This can result in a higher tax bill for the taxpayer. Responding promptly and furnishing detailed documentation is vital to addressing IRS inquiries effectively.

How Should I Address Additional Income Uncovered by the IRS?

In cases where the IRS uncovers additional income through bank statements or other sources, it’s crucial for taxpayers to provide explanations for any unreported income. Documenting all sources of income and explaining why certain deposits are not taxable helps resolve IRS inquiries satisfactorily.

What Strategies Can I Use to Manage Audit Requests?

When faced with extensive audit requests, negotiating with the IRS to prioritize larger items of concern can be beneficial. Prioritizing key areas and providing detailed documentation for significant expenses helps establish credibility and trust with IRS auditors. Utilizing documents from third-party sources to support business expenses is also recommended.

What Should I Do If I Disagree with the IRS’s Findings?

If you disagree with the IRS’s findings during an audit, you have the right to appeal. You can submit a formal protest outlining your disagreements within 30 days of receiving the audit report. Seeking professional assistance from a tax attorney or CPA experienced in IRS audits can help you prepare a strong appeal.

How Far Back Can the IRS Audit My Tax Returns?

The IRS generally has a statute of limitations of three years from the date you filed your tax return to audit it, but this period can be extended to six years if there’s substantial underreporting of income. In cases of fraud or failure to file a return, there’s no statute of limitations, meaning the IRS can audit returns from any year.

Can I Amend My Tax Return During an Audit?

Yes, you can file an amended tax return during an audit to correct errors or provide additional information. However, it’s essential to coordinate with your auditor and ensure that the amended return is submitted accurately and promptly. Any changes made should be thoroughly documented to support your case.

What Happens if I Can’t Provide Certain Records Requested by the IRS?

If you’re unable to provide specific records requested by the IRS during an audit, it’s essential to communicate this to your auditor promptly. In some cases, alternative documentation or explanations may suffice. However, failing to provide requested records without valid reasons could lead to the disallowance of related deductions or credits.

Remember, facing an IRS audit can be less stressful with the right guidance. Seeking assistance from experienced professionals like those at Milikowsky Tax Law can provide invaluable support and ensure a smoother audit process.

Final Notes

Navigating an IRS audit may seem daunting, but with expert guidance from John Milikowsky, taxpayers can confidently address IRS inquiries and provide comprehensive documentation. By understanding the audit process and adhering to IRS requirements, taxpayers can navigate audits successfully.

Learn More About Milikowsky Tax Law

At Milikowsky Tax Law, we have over a decade of experience working with IRS and tax audits. We’re experts in defending business owners in the face of IRS or other government agency audits.

Interested in learning more? Read on to learn how to respond to an IRS audit.