IRS Audit Process

Like many things tax-related, the IRS audit process can seem intimidating. However, the IRS audit process can actually be methodical and organized when it is laid out in simple steps. This article aims to simplify the process by answering some frequently asked questions about the IRS audit process.

What is an audit?

An audit, which is conducted by the Internal Revenue Service and/or State or local tax department, is a detailed review of one’s accounts, tax information, and finances to affirm that all information regarding those topics is reported correctly and legally. The ultimate goal of the audit process is to ensure that the amount of tax and tax deductions reported by an organization or an individual is correct and in accordance with the United States’ tax laws and regulations.

Why am I being audited?

Many people make the initial mistake of thinking that being audited means there is something wrong. This is not always true. A computer algorithm within the IRS can choose taxpayers to be audited based on their past returns or tax history. Sometimes, the IRS will find inaccuracies in the information reported and records provided, such as a W-2, and an audit will need to be conducted. Finally, you may be included in an audit if business partners or related investors have been audited and your input is needed.

How will I know if I am being audited?

You will be alerted about an audit via mail most of the time. After being notified, you will proceed through the IRS audit process using mailed documents or through in-person interviews with the IRS. The IRS will instruct you as to what papers and files are needed to complete the audit. You will never be contacted via email by the IRS regarding an audit.

What are my rights during an audit?

It is important that you understand your rights during the IRS audit process. These include: the right to professional treatment by the IRS, a right to confidentiality, a right to know why the IRS is taking your information and how they plan to use it, a right to representation, and a right to appeal any disagreements both within the IRS and within a court of law. Should you agree with the audit findings, you will need to sign the examination report and pay any money owed to the IRS. If you disagree with the audit findings, you will confer with an IRS manager and may also file an appeal.

Work with the CPAs at 212 Tax for professional guidance and representation regarding your IRS and/or State or local tax audit.