Your IRS Defense Blueprint

Knowledge without action is just information. This is the conclusion of my book, The IRS Survival Guide, and the point of it is to leave you with a plan rather than a pile of facts.

Video

Watch my full video on this topic below, or watch on YouTube.

The five fatal mistakes

These are the mistakes I saw taxpayers make from inside the IRS, and still see now that I represent people on the other side.

1. Failing to prepare. The time to prepare for an audit is years before it happens, through consistent bookkeeping, organized records, and self-auditing your own return.

2. Not knowing the law. Tax misconceptions cost people more than the honest mistakes do. You need to know the rules or work with someone who does.

3. Underestimating your right to disagree. The IRS can be wrong, and often is. You can push back administratively inside the IRS system and judicially through the courts. Both need to be navigated properly.

4. Adopting an adversarial attitude. This is the section I think sets the book apart. Cooperation, preparation and credibility win audits. Hostility loses them. It is not tax law, it is how you communicate with agents, and it is badly undervalued.

5. Going it alone. Taxpayers with professional representation get significantly better outcomes. Know the different types of professional and when to bring one in.

An action plan you can start today

This month. Pull your tax transcripts at irs.gov and read them properly. Review your bookkeeping system and ask whether it gives you a clear, accurate financial story. While you have the transcripts open, confirm that the income and expenses in the IRS system match your records and your returns.

This quarter. Review your most recent returns against the red flags in the book. Make sure you have documentation for your five largest deductions. If you have not already, separate your business and personal finances completely. There was nothing worse as an IRS agent than commingled accounts, because it complicates everything and creates problems that did not need to exist.

This year. Find and vet a tax professional you trust before you need one. Put a real record retention system in place. Review your estimated tax payments to avoid underpayment penalties, which you can check against your IRS account.

And whatever else you do, respond to every IRS notice promptly, in writing where a response is required. Timely, complete responses win. Ignoring the IRS only creates bigger problems later.

Where this started

My first audit as an IRS agent, fresh out of college, was in a hair salon. I sat there sweating through my suit watching a taxpayer pull a shoebox of receipts out from under the table.

That moment stayed with me. The tax system has enormous power and the IRS has enormous resources, but they are not infallible and you are not powerless.

The business owners who come through audits in the best shape are not the ones with the most money or the best accountants. They are the ones who prepared, who knew their rights, who treated the process professionally, and who asked for help at the right moment.

Go to TheIRSSurvivalGuide.com to get your free PDF copy of my book today.