Financial Planning Exercise 7 Preparing for a tax audit Timothy and Michelle Morrison have been notified that they are being audited. What should they do to prepare for the audit? A. They should not take any action until more specific requests are received. The IRS can independently verify the accuracy of information recieved from taxpayers, and only if errors are found, Timothy and Michelle will be involved. B. Timothy and Michelle should hire an independent expert to check and correct if necessary their records and documents, but they should keep it secret from the IRS that someone helped them with the paperwork. C. Timothy and Michelle should gather their records and supporting documents. If they hired a professional tax return preparer, that preparer should be contacted and may be asked to accompany them to the IRS. D. Timothy and Michelle should file an appeal with the help of a lawyer to have the audit invalidated and overturned. If the decision to conduct an audit remains in force, they should prepare for the likely fines that audits usually result in. -Select-v
Real Tutor Solution
Answer
Solution
Sign in to Unlock Answers for Free!
A Learning Platform Trusted by Millions of Real Students and Teachers.
Unlock Reviewed and approved by the UpStudy tutoring team
Extra Insights
When facing a tax audit, preparation is key to a smoother experience. Timothy and Michelle should gather all pertinent records such as receipts, bank statements, and prior tax returns. Ensuring every piece of documentation is organized will not only help during the audit but also demonstrate their willingness to cooperate with IRS requests. Hiring a tax professional can greatly benefit taxpayers during an audit. This expert can navigate the complexities of tax law, represent them before the IRS, and help clarify any misunderstandings. Open communication with this professional is crucial—keeping them informed about all aspects of the case allows for better preparedness and reassurance during the process.
