Knock, Knock Should the IRS come calling, your welcome mat had better read `insured.'

Does the thought of an IRS audit send chills down your spine?Unexpected unpaid taxes compounded by interest and penalties canplay havoc with any BIZ Experiences's budget. Even the cost ofdefending yourself at an audit--whether or not additional taxes areassessed--can be significant. But a new insurance product canprotect individuals and sole proprietors from the expenses relatedto an audit.

Audit Protection Insurance Services Inc. (API) of Santa Rosa,California, has developed an insurance policy that pays theadditional taxes and interest brought on by audits, as well as thecost of representation by a tax professional, up to a designatedlimit. If you file a Schedule C, premiums start at $236 for $3,000in coverage and go up to $486 for as much as $10,000 in coverage.Tax returns are covered for four years--one year longer than theperiod covered by the IRS' statute of limitations for audits.Of course, the policy doesn't cover fraud--so you aren'tprotected if you lie on your return and get caught.

Currently, audit protection insurance is available in Californiafor professionally prepared individual tax returns, with or withouta Schedule C. Coverage will be extended next year to personallyprepared individual returns, and will expand to nationwide in2001.

If you're not eligible for audit protection coverage thisyear because you have a troubled audit history or your tax returnsaren't professionally prepared (next year, both personally andprofessionally prepared documents will be eligible), you can optfor API's IRS representation service, which is currentlyavailable nationwide for both personally and professionallyprepared returns. For $195 per year, API will pre-audit your returnprior to filing and represent you with the IRS should you beaudited. This doesn't cover taxes or penalties, however. Bothproducts can be purchased at http://www.audit-protection.com