How Likely is a Bankruptcy Audit?

: Reese Baker & Associates

  Filed under: Bankruptcy Information

auditWith so much involved in making a bankruptcy claim, it is concerning that an IRS audit may be possible during or after filing for either Chapter 7 or Chapter 13 bankruptcy. But does it make a debtor more likely to be audited if they file a claim for bankruptcy? A Bryan/College Station bankruptcy lawyer will be able to act as a guide through this process, as well as provide more information on the likelihood of an audit during bankruptcy.

While filing for bankruptcy can put a stop to many inconveniences, such as menacing phone calls and further debt, it doesn’t exempt taxpayers from being audited by the IRS. At the same time, it doesn’t make it all that more likely either. It’s true that a small number of bankruptcy claims are selected each year to receive an audit, but with so many claims, the chances of being singled out are similar to those who haven’t filed for bankruptcy.

Once bankruptcy is filed, a neutral trustee is appointed to review the case, and if you are chosen for a bankruptcy audit, a notice will usually be sent within 10 days of the claim being made. The purpose of the audit is to prevent abuse of the system and verify the accuracy of the paperwork submitted. A bankruptcy lawyer is able to inform you of the chances of receiving an exception audit, which occurs when the income or expenses vary greatly from the norms.

Getting the help of a skilled bankruptcy lawyer to properly fill out the paperwork and avoid creating a red flag on the claim can be a great help when filing for any kind of bankruptcy. Debt is bad enough without having to go through an audit as well. If your claim is chosen, your bankruptcy lawyer can help gather the necessary materials and present them to the audit firm appropriately.