But, according

to the Georgia Society of CPAs, an audit should be viewed as nothing more

than an impartial verification that you have reported all your income

and are entitled to the exemptions, deductions, and tax credits claimed.

Should that dreaded notification appear in your mailbox, here are some

helpful strategies for dealing with the IRS.

Strategy #1

- Don't panic. Prepare!

Carefully read

the letter from the IRS to verify that the information is correct. Be

sure you understand what you are being asked to do. Respond promptly but

don't hesitate to ask for a postponement if you need more time to assemble

your records.

Preparation

is the key to getting through the audit as painlessly as possible. Be

sure to review each entry on your return, organize your records, and identify

potential problem areas.

Strategy

#2 - Think twice before attending your own audit.

You can choose

to handle the audit by yourself, have a representative, such as your CPA,

go with you, or have him or her go in your place. Most experts recommend

that you do not attend your audit. Having representation is often the

best way to prevent the audit from escalating beyond the original area(s)

that attracted the IRS's attention.

For example,

if the auditor decides to question an area on your tax return, a representative

can say that he/she doesn't have the answer, thereby giving you more time

to research the area and secure the necessary documentation.

If you decide

to attend the audit and address the questions yourself, it is important

that you provide exactly the information needed to answer a legitimate

request by an auditor and no more. Answer questions honestly but briefly,

and hand over only the documents needed to support the deduction being

questioned.

Providing the

minimum amount of information helps to contain the audit. CPAs recommend

that you don't become argumentative. What you don't know about tax aw

can hurt you. It generally works to your benefit to let the auditor lead

the discussion.

Strategy #3

- Know your rights.

The IRS is

required to inform you about your rights as a taxpayer. For example, you

have the right to prompt, courteous and impartial treatment. You have

the right to ask for a reasonable amount of time to produce requested

documentation, stop the audit to consult a tax advisor, and request that

the site of the audit be changed.

For complete

details, read IRS Publication 1, Your Rights as a Taxpayer . You

can order this publication by calling the IRS at 1-800-829-3676.

Strategy #4

- Know the appeals procedure.

In the end,

you may agree or disagree with the auditor's findings. By agreeing, you

will be asked to sign a form to that effect and pay any outstanding taxes,

interest, and penalties.

If you disagree,

you can speak with the agent's group manager to see if the problem can

be resolved at that level. If that is not successful, there are numerous

avenues of appeal you can pursue, such as taking the case to Tax Court.

It's wise to consult with a CPA who can recommend the best approach for

your particular situation.

Strategy #5

- Avoid getting audited.

Perhaps, the

best strategy is to avoid being audited in the first place. Some of the

"red flags" that may increase your chances of an audit include

any evidence of unreported income, personal expenses disguised as business

deductions, large deductions that are out of line with reported income,

and sideline businesses that never show a profit.

If your return

includes a large or unusual deduction or credit you think the IRS may

question, you may want to attach an explanation to your return.

Most importantly,

CPAs recommend that you maintain accurate and comprehensive records to

support your deductions. For this reason it's important to put record

keeping at the top of your to-do list.

The GSCPA is

the premier professional organization for CPAs in the state of Georgia.

With over 10,000 members throughout the state, the purpose of the GSCPA

is to promote the study of accountancy and applicable laws, provide continuing

professional education, maintain high ethical and work standards, and

provide information about accounting issues to the membership and the

public. For more information, access our web site at www.gscpa.org.

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