4 Types of IRS Audits
Fear and dread is an almost universal response to the notification of an IRS audit. We are somehow conditioned to assume the worst. And while sometimes an audit can be a nightmare that costs you a lot of money, other times it is very routine and painless.
Arming yourself with knowledge will help you understand your rights and feel more prepared to deal with whatever will be required of you — and the potential outcomes. Not all audits are the same, so we’re going to outline each one for you.
- Random Audit
A random audit is literally just what it sounds like. Each year the IRS randomly chooses a certain number of returns to review. If you are one of the lucky few chosen for this, you should know that the IRS will want to see your entire return, not just a section.
Normally, you do not need representation, but tax professionals recommend that you spend extra time before the audit organizing all of your documents and receipts so that it is as clear as possible to the IRS auditor.
If you feel that you are particularly vulnerable to further questions or penalties, you can always elect to attend this meeting with a tax representative.
- Correspondence Audit
This is the least serious type of audit. You receive written notification from the IRS inquiring about a specific issue on a tax return. For example, they ask for back-up documentation about a deduction you took. If you are able to respond with the appropriate information that may very well be the end of it. In many cases, you do not even need representation for this type of audit.
- Office Audit
In these cases, the IRS makes contact with you by mail asking you to visit their local office for an audit. This is typically more serious than a correspondence audit and you may opt to bring a tax professional with you to help with communication. Typically an office audit will last only one day and your only follow-up may be to supply the IRS with information that they requested.
- Field Audit
As you might expect, a field audit is typically the most serious and involves the IRS coming to you. When they visit your home or your business, they’ll have the right to ask for a variety of information. The audit is not confined to any specific information, so you will want to pull all documentation that you have related to the return in question. You may also choose to partner with a tax professional to help prepare for a field audit.
Audit Preparation and Representation
Success Tax Relief has extensive experience working with clients on audit preparation as well as audit representation. Of course you’ll feel some stress, but we can help you gather the documents you need and communicate with the IRS on your behalf. Give us a call now at 877-825-1179 if you are concerned about an upcoming audit.