Hyden, Miron & Foster, PLLC Law Blog

Friday, November 8, 2019

What Happens During an IRS Audit?

“IRS audit” is a phrase dreaded among most of the United States. Even for those of us who keep the most meticulous of tax records and properly file everything, the prospect of an audit is a stressful one. If you receive a letter in the mail from the IRS notifying you of an audit, panic may have set in. To help assuage some of your anxiety and prepare yourself for what is to come next, it is a good idea to familiarize yourself with what actually happens during an IRS audit.

What Happens During an IRS Audit?

The IRS selects people for audits using several different methods. Sometimes, random selection is used based on a statistical formula. The IRS compares the submitted tax returns and compares them to random, valid sample returns. Additionally, you may be selected for an audit based on “related examination.” The IRS may have selected your return because your return involved issues or transactions with other taxpayers, including business partners or investors, whose tax returns were also selected for audit. Once your return is selected, an IRS auditor will review the return and see if it merits further investigation.

The IRS will notify you of the audit via mail. The IRS will never initiate an audit by telephone. An audit may be conducted entirely through the mail or may require an in-person interview or “field audit.” An interview may occur at an IRS office or at your home, place of business, or accountant’s office. You may need to bring along specific documentation to the interview. You may also want to consider bringing your accountant and/or an attorney to represent you.

Field audits are definitely the most intense form of audit. In a field audit, an IRS agent goes to your home or place of business in order to conduct a deeper investigation into what you reported on your tax return. The IRS initiates field audits in cases when a serious red flag has been raised by a return. The field audit may also have been initiated due to a long list of questions on which the IRS needed clarification.

When an audit is conducted completely by mail, the letter sent by the IRS initiating the audit will request further information about certain tax return items. The IRS may need additional information regarding things like your income or expenses, among other things. An audit by mail is the most common way for audits to be conducted. It is a fairly simple way for the IRS to get more information if it has questions or wants more documentation to support your tax return. Usually, submitting the requested information or documentation will resolve the matter and the audit will come to a close.

An audit may result in no changes. In this case, it is likely that you have provided all necessary supporting documentation and information and the IRS is satisfied that your return is accurate. In some cases, the IRS may propose changes to your return. An audit may alternately result in you agreeing to the changes and signing the examination report or comparable form depending on the audit type. In other cases, the IRS will propose changes to your return and you will disagree with the changes. In this situation, you have the right to request a conference with an IRS manager.

Tax Attorneys Helping You Through an Audit

Audits can be stressful and confusing. The trusted tax attorneys at Hyden, Miron & Foster, PLL will provide the support you need to get through the process. Contact us today.

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