Less than one percent of individuals receive a notice from the IRS that they are being audited; however, nothing seems to fill people with as much dread as the prospect of being targeted. If it happens to you, do not panic.

One of the most common misconceptions about the auditing process is that they are “out to get you,” In reality, it could mean something as simple as a computer randomly selecting you for an audit.

The Best Defense Is a Good Offense

The best way to cope with an audit is to always be ready for one. By keeping meticulous records you can justify any number the IRS may question on your return. This level of organization will help your audit process go quickly and hopefully painlessly as you will have records to support your claims.

If you are past this point, though and the auditor is knocking at the door right now, here are some tips:

1. Be polite. It is a stereotype to not like the taxman, and you are probably not happy you are being audited – but being rude will not get the IRS to leave you alone, and it could make the situation worse. Make it clear that you want to be cooperative and resolve the audit quickly for both your sake and the IRS agent’s. Failure to cooperate with an audit can lead to an expansion of its scope because the IRS agent assumes you have something to hide – or the IRS agent can even conduct the audit without you and effectively pick numbers based on whatever limited documentation he has. As an aside, do not enter a heated argument with an IRS agent over any items. It will not serve to help your cause.
2. Answer questions honestly, but never volunteer any information that is not necessary. Avoiding idle conversation will help. Why be so sparring with your words? Often times an auditor is only interest in a particular item on your return, but you could accidentally offer an auditor hints to other areas that should be examined – effectively expanding the scope of your audit. This is why you should not be hostile to your auditor while keeping in mind that he is not your friend.
3. Never give an IRS agent the only copy of a document or the original. If the document is verifying a claim on your return, make copies and keep the original in a secure place. Though an IRS agent should not have malice, they are only human and can misplace paperwork just like anyone else. The difference here is if they misplace your only copy of a document, you will be the one to pay – literally.
4. Know your rights. If an auditor is being unreasonably hostile or you disagree with his decision, you have the right to go to a supervisor. Furthermore, if you are not satisfied with the supervisor, you can go the office of appeals. Finally, as a very last resort there is the U.S. Tax Court.