The Audit Letter - First Action

You receive a notice from the IRS, either the CP2000 (oops letter) or a true audit notice. You should know by now not to panic and that you should double check to see if the IRS is correct in the case of the CP2000. Your first action, whichever audit you draw, should be to proceed to where you have stored your copy of the soon to be audited return. Grab the whole return, including the documentation you used to create the return, and proceed to the most convenient copier and copy it all. At least one full set including the state return. Then put a full copy (I suggest the original) in a safe place. Use a copied set to prepare for the audit. 

In the frantic of an audit, papers you currently don't need get put aside and are more easily lost. But those may be papers you will need after the audit. For example, state returns will need to be amended once the audit is completed. This requires a copy of the return as originally filed. You may need a copy of the W-2s for a bank or for financial aid. Or the IRS find another issue with the return. Having a back up of the original return and documents could come in very handy.

If I prepared the return, I will have archived copies of the return. But I am often called upon to handle letters from the IRS or a state for new clients. I have to rely on the client to supply the returns. Too often, they only have part of the return. While I may be able to get what I need from the IRS or state, it will take longer and cost the client more in time. So much easier for all if the client has a full copy of the return.

Take the time to properly store your return and the supporting documents. If you used a paid preparer, make sure you get a copy as filed (paper or digital) and your docs back. If you did it yourself online, print out a copy. Make a copy of a paper return before you mail it. And if the IRS or state comes calling, make a working copy. It could save you or your preparer some grief down the road.