IRS Audit Process – What to Expect

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The IRS Audit Process can start out in a variety of ways but usually, it starts out with a letter. A  letter saying “bring all your books and records down for review by the IRS.” Few letters strike fear into the hearts of Americans as an IRS Audit. But with some advance information, you can be better prepared after you receive such a letter. You’ll have a better understanding of the entire IRS audit process including Notices of Deficiency, Tax Court, correspondence audits, field audits, office audits and more. This video describes the different types of IRS Audit and what to do when faced with dealing with any of them.

Click here to read or watch more IRS Problem resources.

If you receive an IRS Audit Notice from the IRS because of IRS Back Taxes that you owe, you need to know what to do.  At times, you do not even need to see an IRS agent face-to-face.

The IRS audited 1,581,394 individual income tax returns in 2010. 1,238,632 of those were by correspondence.  The rest of the audits (342,762 in number) through personal interview.

Among the corporate taxpayers, the IRS audited 29,803 returns and 1,202 of them were done by correspondence while 28,601 of them were done in the field.

What are your chances of an audit?

However, this year your chances of receiving an IRS audit notice would have risen since the IRS has increased the number of IRS agents over the last 2 years. There was an increase of  3% in 2009 and 7% in 2010.

Did you receive an audit notice?

Here’s what normally happens in a field audit.  It begins when a Revenue Agent sends you a letter informing you that your tax return has been selected for audit.  Also, the letter will contain the day and time the audit is to begin and the records the IRS Agent would like to examine.

What you should do is contact your tax attorney immediately.  It is highly advisable that you do not attempt to handle your own tax audit without help.  There are some technical issues that require a trained eye and knowledgeable mind to determine, such as whether the IRS is suspecting you of fraud in your tax return and other technical details.

It is also important to know what to do under different circumstances.  For these and other reasons, you need professional legal counsel.

If you do not have a tax attorney, call us at (813) 229 7100 for a free consultation.

Once you have hired your tax attorney, your attorney will fax a Form 2848, Power of Attorney and Declaration of Representative to the IRS Agent. They will follow-up with a phone call first to discuss the start date of the audit.

What Happens Next in the IRS Audit Process?

The IRS Agent will want to interview you. You should ensure your tax attorney is present. Only offer relevant information during the interview and nothing more.  It is a mistake to think you can talk yourself out of the audit by being overly chatty.

The IRS Agent is looking for evidence of fraud and if he has reasonable grounds to suspect it, he will refer your case to the IRS Criminal Investigation Division.

Upon completion of the IRS audit, the Revenue Agent will meet you to review the proposed adjustments. You should have your tax attorney with you at this meeting because your attorney will negotiate with the Revenue Agent on the proposed adjustments.

If you have questions call my office at 888-438-438-6474 and we can chat about it. 

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