The Georgia Department of Revenue and the IRS have the right to audit any individual or business tax return filed with the state.
The tax audit process varies depending on what’s being audited, your liability, the type of mistakes you made, and other factors. When you live in Georgia, it’s important to understand exactly how the process works on both the state and federal levels so you can prepare.
The good news is that you don’t have to deal with tax audits in Georgia on your own. Work with the Wiggam Law experts, who can help you navigate the process and get the best outcome possible.
Key Takeaways:
- Audit notice – The audit process in Georgia starts with an initial notice about the audit, and then you’ll meet with an auditor to review your records.
- Payment options – If the audit leads to a tax assessment, you have options to get it paid off or to settle your debt, including a payment plan or offer in compromise.
- Appeal – If you disagree with the results, you can file a protest or appeal the decision.
What Are Tax Audits?
Tax audits are processes the government uses to review your records to ensure tax compliance. This may mean looking through the receipts of a business to ensure everything that was reported on a tax return is accurate or reviewing an individual’s eligibility for a tax credit they claimed.
Audits can either be conducted through the mail, where the IRS or Georgia DOR asks you to send in more documentation, or in person through official interviews.
Types of tax audits in Georgia
In Georgia, the state tax agency may audit a range of returns and tax processes. For example:
- Individual income tax returns
- Business sales and use tax returns
- Corporate income tax returns
- Business withholding
- Motor fuel taxes
How Georgia selects returns for audits
Some audits are random, or your return could be selected for an audit through an automated process.
For example, one reason you may be audited is if the Georgia Department of Revenue (GADOR) or the IRS receives information from other sources that doesn’t align with what you provided on your tax return. For instance, your employer will send your tax information to the government, and a discrepancy may show up if what you report for that income isn’t the same.
An audit could also happen if you filed your federal return but not your Georgia return or if there was a difference in what you reported to the IRS versus the state. The state’s website states that most tax audits on individual income tax returns are initiated because of information received from the IRS.
If you have questions about tax audits or why you’re being audited, always work with a tax professional for assistance.
The Tax Audit Process in Georgia
The state’s Department of Revenue follows a certain process for audits, as does the IRS. Let’s look at what this process looks like if Georgia is auditing your taxes:
Initial Notice
You’ll first receive a notice in the mail informing you of the audit, which is sent at least 10 days before the audit is set to start. The audit should start within 30 days of the notice. Depending on your situation and what the government needs to review, the audit could take a few months to resolve.
First Meeting with Auditor
The auditor will contact you to set up the initial meeting about the audit. For businesses, this is when the auditor will gather basic facts about the business, including how accounting is done and employment information.
Review of Documentation
Next, the auditor will take a close look at your tax returns, business records, accounting documents, and other information to compare all the records with what you reported on the tax return in question. This process is often done wherever you conduct business but may be at the auditor’s office or your tax pro’s office.
Recommended Adjustments
In some audits, the auditor may discover that no adjustments to your tax return are needed, which is usually the best outcome. However, some audits result in suggested adjustments that could lead to a higher tax bill or a different refund amount.
What If I Don’t Agree with an Assessment?
If a tax audit in Georgia results in a new tax assessment, you may disagree with the findings. Your first step is to carefully review the Notice of Proposed Assessment that the auditor will provide post-audit. Understanding everything on this document is key, so consider working with a tax expert who can help you break it all down.
If you disagree, you can file a protest. You have 30 days from the date on your Notice of Proposed Assessment to protest the new assessed amount. Note that the state will only grant protests if you disagree with the new amount that’s due — so if you simply can’t afford to pay, you shouldn’t submit a protest.
Complete the Protest of Proposed Assessment or Refund Denial form (Form TSD-1) to submit your protest within the given time frame. You will check this form’s “Protest” box to indicate its purpose. The state will consider your file date the date you postmark the mail. You can also submit your protest online using the Georgia Tax Center.
You may hear from the state if more information is needed, but if you provided everything necessary, you’ll hear about a decision, which can be either granted, denied, or denied in part.
Submitting an Appeal after an Audit
If you filed an unsuccessful protest, the state will send an Official Assessment with the amount you owe based on the audit and the protest review. At this point, you can decide whether or not to appeal.
You can file your appeal with the Georgia Tax Tribunal or another superior court. You only have 30 days to do so from the date on your Official Assessment document. You never want to let this time period pass, as your appeal rights will be lost after 30 days.
What to Do If You Can’t Afford a Higher Tax Assessment
If an audit leads to a higher tax assessment, your best way forward is to pay the new amount in a timely manner to avoid penalties and interest. However, you may not be able to pay it right away. You have options if you can’t afford the amount in full:
Request a Payment Plan
Georgia allows taxpayers to request a payment plan in most cases. This means you can pay off your unpaid tax balance through monthly payments instead of in a lump sum. Both individuals and businesses can apply for payment plans, and you can start the process quickly using your Georgia Tax Center account.
Apply for an Offer in Compromise
You may qualify for an offer in compromise with the state if you can’t afford the amount owed. This option allows you to settle your debt for less than your full balance. You can apply for an offer in compromise online in your Georgia Tax Center account using Form OIC-1 and either Form CD-14B or CD-14C, depending on whether you’re an individual or a business.
In your application, you’ll also indicate why you can’t pay: either doubt as to collectability, doubt as to liability, or economic hardship. You then need to explain your situation to show why you’re applying. There’s also a place for you to upload documentation to support your claims.
The state will only approve your request if the offer you provide in your application is all they can reasonably expect to collect from you based on your circumstances. They’ll look at your current financial situation and future expected income and expenses.
Tips to Prepare for a Tax Audit
When you’re facing a tax audit, you always need to be prepared. This takes understanding the process and how to comply most effectively. Here are a few tips to get through it:
Keep Organized Tax Records
Taxes are just a fact of life. To manage your responsibilities properly, keep organized records all year long so you can reference them easily. This also helps in the event of an audit, so it’s easier for you to find everything the auditor is requesting. Store and maintain your records securely.
Never Ignore Notices
Anytime you receive an IRS or Georgia State notice in the mail, don’t ignore it. Read it thoroughly so you know why you’re being audited and what you need to do next. Pay attention to deadlines so you never miss out on your chance to respond and aren’t hit with additional penalties.
If you ignore an audit notice, you could see these consequences:
- Penalties for noncompliance and building interest
- Loss of your rights to dispute agency decisions
- Collection actions from the IRS or GADOR, including potential asset seizure or wage garnishment
Know Your Rights
While you need to carefully comply with instructions provided by the IRS or your state tax agency, you also have rights as a taxpayer. After an audit, you can protest the new tax assessment if you don’t agree with the amount. If that attempt doesn’t work, you can appeal the agency’s decision and try to prove your circumstances further.
Work with a Tax Expert
Audits can be complicated and stressful. As soon as you are notified about an audit, talk to a tax expert who understands what the process looks like in Georgia. A tax professional can review your tax returns and records, manage the audit process, explain your rights, and help you get the best outcome possible. They can also help you if you decide to file a protest or appeal and represent you in tax court.
Why Choose the Team at Wiggam Law?
Dealing with tax audits is never fun. You may worry that you did something wrong or will get in big trouble with the state or the IRS. But with the right knowledge and support behind you, you can follow all instructions and laws and get the matter resolved quickly.
When you need a professional’s support, the Wiggam Law legal team is here to help. We’ll help you navigate an audit from start to finish, ensuring your rights are being respected and that you complete every step of the process properly.
Wiggam Law can help with everything from audits to back taxes to tax penalties to tax resolution options. Contact us today to talk to a tax attorney about your audit or other tax issue. Schedule a 30-minute consultation call with us or call us at (404) 233-9800 now to discuss your situation and get a sense of your options.