No one welcomes the prospect of a tax audit. The process can stir feelings of anxiety and worry. This is particularly true in Louisiana, where state tax laws can present a complex maze to navigate.
However, with a clear understanding of what the process entails, a tax audit does not have to be a daunting ordeal. Follow these five steps to manage a tax audit in Louisiana effectively.
1. Understanding the audit notice
The first step when facing a tax audit is understanding the audit notice received. This notice will explain why the Louisiana Department of Revenue selected the tax return for an audit and which items they are questioning.
2. Reviewing tax records
After receiving the audit notice, one should gather all relevant documents such as receipts, bank statements and other records that verify the income and deductions reported on the return. Review tax records and be sure to include any documents specifically requested in the notice.
3. Responding to the audit notice
One should respond to the LDR within the time frame specified in the audit notice. A failure to respond can lead to additional penalties and interest.
4. Meeting with the auditor
In some cases, the LDR may request a meeting with the taxpayer. It is essential to prepare for this meeting. One should bring all requested documents and be ready to answer questions about the tax return. The auditor’s job is to ensure accuracy and fairness, not to intimidate or harass the taxpayer.
5. Resolving any discrepancies
If the LDR finds discrepancies in the tax return, one will need to resolve these. This may involve paying additional taxes, penalties and interest. Alternatively, if one disagrees with the findings, they may request a review of the audit determination.
While a tax audit may seem stressful, understanding the process can make it easier to work through.