Good records best defense against Internal Revenue Service audit

You have less than two weeks to get your records in order.

As the April 15 deadline for filing taxes draws closer, a local accountant said keeping proper documentation is the best defense against an Internal Revenue Service audit.

"There's no substitute for good records," said Jim Hillin with Hillin and Clark in Cape Girardeau. "When you have poor records and the IRS needs documentation, you'll probably lose out on that deduction."

Hillin said taxpayers who are audited should provide only the information requested.

"Sometimes clients have the tendency to provide more than the IRS has requested," Hillin said. "That could raise more questions."

The information should be photocopied, he said, because the IRS may not return the original copies to taxpayers.

Hillin, who has been a CPA for 37 years, said taxpayers who are audited can either meet with the IRS or have the process handled by a preparer like his firm. He said 90 percent of his clients who are audited opt for his staff to meet with the IRS on their behalf.

"They're intimidated by the process or don't have the time," Hillin said.

Michael Devine, spokesman for the IRS, said taxpayers should not panic if they receive a letter or notice from the IRS requested additional information. He said the letter will cover a specific issue about one's tax return along with providing detailed instructions on what to do next.

Devine said filing electronically is the best way to ensure an accurate and complete return.

"The software or online program will guide you through the process step by step," Devine said. "Tax preparation software eliminates the most common errors and e-filed returns have an error rate of less than 1 percent."

Hillin also recommended tax preparation software programs because they catch mistakes and throw up red flags about possible problems.

But above all, Devine said, taxpayers should not procrastinate.

"Resist the temptation to put off your taxes until the very last minute," Devine said. "Your rush to meet the filing deadline will increase your risk of making an error."

The Associated Press reported that in 2008, 1 percent of those earning less than $200,000 were audited while the IRS audited 2.94 percent of those whose incomes were more than $200,000.

The IRS collected $56.4 billion from audits last year, down from $59.2 billion in 2007. That's the first decline in such collections in 10 years.

bblackwell@semissourian.com

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