IRS Tax Audit

Understanding An IRS Tax Audit

IRS audits can happen for a variety of reasons: it could occur because the documents used to report your taxes do not match what is reported on the tax return. It could happen because you are a partner in a business that was selected for an audit. An audit can happen simply because you were randomly selected. For whatever reason you were selected for an IRS audit, understanding the audit process is the first step in getting through the audit with ease.

What is an IRS audit?

IRS Tax Audit
IRS Tax Audit

An IRS audit is where the IRS wants to review or examine the documentation used to complete a business or individual’s tax returns in order to confirm that the data reported to the IRS is accurate and that the tax deductions/claims are being reported in accordance to current tax laws. What does this mean? It means that the IRS will request the documentation that was used in order to prepare your taxes in order to confirm that they are correct. You’ll receive notification of being selected for an IRS audit either by mail or by telephone, and any telephone notification of an audit will be followed by a notification by mail. The audit can occur either entirely by mail or through in person interviews at the taxpayer’s home, place of business, or accountant’s office. No IRS audit or audit notification will ever occur by email.

Your Rights in the Audit Process

As published by the IRS, your rights during the audit process are the following:

  • A right to professional and courteous treatment by IRS employees.
  • A right to privacy and confidentiality about tax matters.
  • A right to know why the IRS is asking for information, how the IRS will use it and what will happen if the requested information is not provided.
  • A right to representation, by oneself or an authorized representative.
  • A right to appeal disagreements, both within the IRS and before the courts.

Understanding your rights during the audit process is vitally important. The length of an audit can vary. Each tax situation is different and can require something as simple as confirming a few W2’s, to reviewing volumes and volumes of tax documentation. Once the audit is completed, the IRS could come back with the decision that there are no changes to your tax return, or your tax return could be revised and dependent on the revision, additional taxes may be assessed. The tax payer can either agree to the findings of the audit, or disagree with the findings while acknowledging that there were changes made to the taxes. If you disagree with an audit finding, the IRS has an appeal process where the determination can be escalated for further review.

Even though the audit process can be explained, navigating an audit can be an overwhelming experience. As stated in the rights of the taxpayer above, you have the right to representation during the audit process to ensure that your interests and the interests of your business are protected. Having an attorney that understands the complexities of tax law can make a major difference in the outcome of an audit. Let the experience and expertise of work with you to help you navigate the audit process with ease!