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Surviving an Audit: Stay in Control

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Surviving an Audit: Stay in Control

Tax season can be stressful for many people. You may think you are getting a refund and that everything is fine, only to find out that you are getting audited. The tax agency is under obligation to make sure your documentation is correct. If you have taken care to save documents and have filed your papers properly, there is probably no need to worry. You should be able to backup your claims. Some mistakes are also minor and can be resolved without much hassle. It is important, however, to remain calm and in control when you get the call.

Don’t Talk

You may receive a phone call or letter stating that an audit is imminent. Your thoughts may be racing when you first receive the news. If you are on the phone with a tax representative, it is best to refrain from saying much. Their main goal is to catch a mistake. Even your early statements go on record. Out of fear, you may admit to something that is not true or accurate. This can be brought up later by the auditor when trying to prove your guilt. Try your best to stay calm and in control when speaking to the auditor. Do not answer questions or reveal any financial information. Listen to what they have to say and try to find out what the accusations are. This way you know what you are dealing with.

Get Organised

Once you are aware of the audit, you should begin to review your financial documents. You need to be able to prove that you have completed your tax papers correctly. You may be sending in documents, meeting with the auditors, or both. Stick to the facts about your finances. Make sure you have paperwork to backup your claims. Some misunderstandings happen when the proper proof is not available to the auditor. Meet with your lawyer or accountant to make sure everything is in place before the audit begins. If you do not normally work with a financial professional, you may want to consider hiring one for this occasion. It can be helpful to have someone looking out for your best interest.

Learn About the Process

When you are not educated about ATO audits, you may be taken advantage of. You need to learn about the process and your rights. The auditor is going to ask you for a lot of paperwork. You have the right to question these requests. If you feel they are going too far and asking for things they do not need, call them on it. Refuse to hand over the documents until they give you a solid reason why they are necessary. They may even have to provide this reason to you in writing. If they truly do not need it, they should back down when they realise you know your rights. Request a mediation and then proceed to a formal objection letter if you are still under suspicion. Take the time to learn about the objection and appeal process. Auditors may make a quick decision against you if they think you are not going to protest.

An audit can be incredibly stressful. After all, your financial wellbeing may be in danger. You can get through the process successfully when you know your rights. Familiarise yourself with common auditing tactics and get organised. If you are aware of what is about to happen, you can fight back much better.