Although most people fear an IRS audit, IRS actions are statistically quite rare. However, many Americans still will find themselves the unlucky recipient of a letter from the IRS this tax season. The IRS audit notice may contain news of a tax audit, a lien, a request for payment, or more. Because these letters almost never contain good news, it is worth your time to avoid them and the red flags that bring them.
Once the audit letter has arrived, however, it is too late. Just as we grieve when we have lost a loved one, people who suffer from audits and IRS penalties often have an orderly and predictable grief process. The following are the emotions you can expect to grapple with in the weeks to come.
1. Denial – IRS Audit Notice
Most people would be shocked at how many clients toss an envelop from the IRS in their pile of mail to be dealt with later. “It’s probably not a big deal,” people tell themselves. “Might even be junk mail!” While denial is a natural instinct when faced with an IRS audit notice or other scary correspondence, it is a dangerous instinct. Many people lose precious time that could be spent building a solid defense to pure denial.
Although denial is a perfectly natural instinct, it is important to get past it as quickly as possible. There is a battle to be fought, one that could cost you a great deal of hard-earned money if not handled well.
2. Anger
Sooner or later, the denial is cut off whether we like it or not. If you ignore the IRS notice, the phone calls and even in-person visits will soon begin. Hopefully you have been smart enough to open the letter, acknowledge its horror, and seek professional help. Either way, this stage will be sure to inspire anger in you.
“How could this happen to me?”
“Don’t I pay enough taxes already?”
Then the IRS audit will progress and you’ll move on to the next step: bargaining.
3. Bargaining
There is very little bargaining with an IRS audit, but you’ll try. Your accountant will develop a plan that may also involve bargaining and negotiation, You will also find yourself bargaining with the gods. Maybe you promise that if you get out of this with a bank account balance, you will get an accountant and never commit one of the red flags again. This time, you’ll say, you won’t try to take that risky write-off. Anything to avoid the consequences that come with this IRS audit notice.
4. Depression
If you are feeling more like calling a therapist than calling an accountant, you have reached the fourth stage of mourning an IRS audit. This stage is often when people simply give up and are prepared to accept whatever comes of the IRS notice that may have arrived only weeks before. If you have reached this stage of an IRS audit, it is important to have an accountant to help with your case. This won’t make you feel any better about the process, but it will give you someone to take over the tax audit paperwork as you sink into depths of despair.
The eternal optimist is sometimes not struck down even by the worst news. For rare people, the depression phase does not set in until they see the final decision of their IRS audit.
5. Acceptance
Acceptance is the final stage of grief, in which the storm of negative emotions have passed and you are left with a feeling of acceptance over the turn of events that began with an audit letter. You accept that the process is indeed occurring, that there is little you can do to stop it. People at this stage have usually called in whatever expert help is needed to defend themselves from the audit and are prepared to move on with their lives. Although an IRS audit can be life changing, it usually ends with an adjustment to taxes and little more.
If you are in the middle of these stages of grief or simply want to avoid them, call and accountant today. An accountant knows what issues on your return are likely to invite the eye of the Internal Revenue Service. We can help you to avoid these stages of grief by staying on the right side of the tax man.
