A tax audit is when the IRS decides to examine your tax return a little more closely and verify that your income and deductions are accurate. Typically, your tax return is chosen for audit when something you have entered on your return is out of the ordinary. There are three main types of IRS audits, namely: the mail audit, the office audit, and the field audit.
Mail audits
No matter what type of audit the IRS decides to conduct, you will receive notification of it by mail. A mail audit is the simplest type of IRS examination and does not require you to meet with an auditor in person. Typically, the IRS requests additional documentation to substantiate various items you report on your tax return. For example, if you claim $10,000 in charitable deductions, the IRS may send you a letter requesting proof of your donations. Generally, submitting sufficient proof will conclude the audit in your favor if the IRS is satisfied.
Office audits
An office audit is an in-person audit conducted at a local IRS office. These audits are typically more in-depth than mail audits and usually include questioning by an audit officer about the information on your return. You will be asked to bring specific information to an office audit, such as the books and records for your business or your personal bank statements and receipts. You also have the right to bring an accountant or lawyer to represent you at these meetings.
Field audits
The field audit is the broadest type of examination that the IRS conducts. In these cases, an IRS agent will conduct the audit at your home or place of business. Generally, field audits are conducted when the IRS is questioning more than just a deduction or two. A field audit is generally very thorough and will cover many, if not all, items on your return.
There are three possible outcomes of an IRS audit. If the IRS is satisfied with your explanations and the documentation you provide, then it will not change anything on your tax return. If the IRS proposes changes to your tax return, you can either agree and accept the changes or challenge the agent’s assessment. If you agree, you will sign an examination report or other form provided by the IRS and establish some type of payment arrangement. If you disagree with the findings, you can set up a conference with an IRS manager to further review your case or you can request a formal appeals conference.
Get Tax Audit Assistance
Immediately you receive a tax audit notice, it is advisable to contact experts who would help and represent. You can do this by simply making an appointment with us, during which you should bring the following documents;
- A copy of your IRS audit letter, including any Information Document Requests (Forms 4564, which are attached to the letter)
- Any information and documents that the IRS is requesting
- A copy of the tax return in question
- Copies of your returns from the two years before the return in question
- A copy of the most recent year’s return (if it’s not the return being audited)
- A copy of any documentation you provided to your tax preparer
- Any documents that show the results of any prior audits
- A copy of any other IRS letters or notices that you have received for the tax year in question
Tax audits happen all the time. The IRS is simply doing its due diligence. There is no need to panic, call us now.