IRS Audit is the process of examining an organization or individual account and financial information.  The main objective of IRS audit is to ensure that the financial information given by organizations or individuals is correct according to the tax laws.  Several methods are used by the IRS to select the assessment files for audit.  Such audits are completed by examining the records either by mail or through an in-person interview.  It is important to note that IRS audit will not initiate the audit process by phone.

Types of IRS audit

Knowing the type of audit will make the tax payers to feel stress-free for the audit process.  It is always better to contact the tax professionals once you receive the audit notice.  They will analyze your options and make contact with the IRS agents for Tax Audit Representation.

There are four types of IRS audits:

  1. Correspondence Audit

This is the lowest level and least severe type of audit.  In this IRS will be sending letter in mail requesting more information about part of a tax return.  If you have the necessary receipts or information, you can easily handle this audit by your own without the need of tax attorney.  If you don’t have the receipts or information then you will need a tax professional to handle the IRS because you could face fines, penalties and interest if you end up owing money.

  1. Office Audit

The office audit is more serious than the correspondence audit.  If IRS needs more information and documents then they will send letter in mail inviting you to visit IRS office for audit.  For this type of audit, one needs to bring their office audit preparer and tax attorney for audit representation.  IRS prefers to discuss with the Tax Audit Representation Professional who can understand the audit process and make the entire audit seamless.

  1. Field Audit

During a field audit, the IRS professionals will directly visit your home or office.  If the IRS is coming out to you then they are looking for more information.  Most of this type of audit will end up in favor of IRS.

  1. Random Audits

In this audit the IRS agents will not be looking for something in particular.  They make comprehensive audit to find a way in increasing the taxes.  If you do not have proper receipts or other documents, it is advisable to contact a tax lawyer who can help you with different options based on the case.

The time taken for the IRS audit depends on the issues involved and how quickly and completely we respond to the audit letter.  It also depends on the type of audit.  Correspondence audits are usually quick and straightforward than the other audits.  Mail audits will generally complete within three to six months.  Office audit will also take the duration of three to six months.  But it will get delay if you are not providing complete information or the IRS auditors finding more issues.

The chances of getting audited

There are several reasons for the IRS to audit an organization or an individual.  Here is a summary of a few such reasons;

  • Math mistakes, hiding income, deduction overkill and round numbers are the most common reasons for getting audited by IRS.
  • While filing your own taxes, avoid math errors otherwise you will be fined regardless of whether your mistake was intentional. You can use tax preparation software or a tax professional to avoid such math mistakes.
  • If you fail to report any part of your income then you will definitely audited by the IRS.
  • If you report false donations without having any proper documents then it will surely lead you to the IRS audit.
  • If you are a business owner and hide your income by filing personal expenses as business expenses then the IRS will begin to review your returns for audit.

Can the IRS audit you after a refund?

The IRS can audit the tax returns even after it has issued a tax refund to the tax payer.  A tax refund means that the IRS has reviewed your returns and agreed with your calculations.  Yet, if significant errors are identified, the IRS can audit the tax returns filed in the last three years but not more than the previous six years.

Who can represent a taxpayer in IRS Audit?

An Enrolled Agent (EA), a licensed CPA or a tax attorney can represent a tax payer in IRS Audit.  These individuals are able to represent you by arguing points of law with the IRS.  IRS Audit Group has professionals with CPA, enrolled agents and tax lawyers who can involve in the Tax Audit Representation.  Let us talk to the IRS for you to help solve the issues faster and in favor of you.  We not only serve in California, regardless of your location our certified tax lawyers are experts in state tax and federal tax law.

Contact us immediately: 1-888-300-6670.