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Is an IRS Audit Ever Considered “Normal” or “Routine”?

Is an IRS Audit Ever Considered “Normal” or “Routine”?

By on Jul 5, 2016 in IRS Audit | 0 comments

6757821397_ba181435ea_bIs an IRS Audit Ever Considered “Normal” or “Routine”?

For the Internal Revenue Service (IRS), an audit is a normal routine for them. In fact, it could be said that they’re not doing their job right if they’re not issuing audits. For the recipient, it may not be such a normal routine for them, because let’s face it, how many people do you know have been audited? Whether it’s none, a few, or many—it doesn’t matter to the IRS. Some audits are random and others aren’t. For that lucky recipient, it’s anything but routine if he or she isn’t prepared.

Intentional and Random Audits

The IRS conducts random audits through a computer screening selection that is based on a statistical formula. You might say that audit screenings are somewhat like a lottery; only in this case, you probably wouldn’t want to be the selected “winner” here. So in this case, any taxpaying citizen can get audited.

Intentional audits are nothing that’s personally vindictive on the IRS’ part. It’s their job to make sure that all annual filings are correctly submitted and that there’s no misinformation that would cause a miscalculation of the country’s overall budget. Looking at it from this perspective may give you a better idea of the seriousness of why the IRS must conduct audits.

There are a couple of ways intentional audits are done:

Document Verification

Something as simple as making sure that the name, address, and especially the social security numbers in your tax filing matches what’s on the W2 or 1099 Form can make all the difference between getting your tax return on time or delaying the filing process and worse, getting audited. If the IRS finds that there’s too many inconsistencies in your tax filing, they may require a closer look at your financial records and this could date back anywhere from 3-7 years, possibly even more.

Related Document Issues

When you hire a tax preparer to file your annual taxes, you are entrusting that person/business to carry out a service with your private documents. If something is not 100% legit with their business, the IRS may contact you just because they’re auditing that business. Even if you happened to be in partnership with another business entity, if that company is undergoing an audit with the IRS, your company may also have to go through a thorough examination of financial operations.

So, in this case, you may get audited by being associated with a certain company, but the chances of you having to dig deep to produce financial documents are slim. Of course, audits are handled on a case-by-case basis as each one is handled differently.

Reduce Your Chance of Getting Audited

Whether you are conducting financial or personal money matters, in a perfect world, you’ll be putting yourself through a routine auditing process. Knowing exactly how much money is coming in and going out of your business and personal account will provide you with accurate information in determining how much you owe the IRS. Auditing yourself isn’t as intimidating as you may think. With the proper guidance, you’ll be able to better manage your finances. If you’re chosen for a random or intentional audit, you’ll be ready. 

Contact the tax relief professionals at Success Tax Relief for a free consultation on how you can better manage your finances to reduce your chances of avoiding an audit.

 

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