The IRS audit process – how does it work?

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What is the Process of an Audit?

The IRS conducts thousands of audits on tax returns annually. Correspondence field, and face-to-face are the 3 forms of audits. If you are being audited, it does not mean that you have done anything wrong. What it means is that the IRS has to investigate if your tax return was prepared right.  Click here to read or watch more IRS Help resources.

Each tax return submitted is examined with its deductions compared to the averages by the DIF or Discriminate Function System. You’re going to be audited if your DIF score is more than average.

A correspondence audit is conducted through the mail. You’ll get an IRS notice that asks for more information regarding a specific item on your tax return. Read the notice and comply with its requirements promptly. Documents proving the facts you on your tax return will be required. You must have copies of the documents. Don’t submit originals. For evidence that the documentation was received by the IRS by the deadline, mail them through certified mail.

If you receive correspondence informing you that you need to pay more taxes due to a math error or because you didn’t declare income that was on your 1099 form, do not pay the amount without comparing your tax return with the information on the IRS notice. The IRS can miscalculate what you need to pay or enter data incorrectly, too. Appeal in writing in 60 days if you don’t agree with the added tax.

A face-to-face audit needs you to be in the auditor’s office, while a field audit will bring the auditor in your home or office. If your tax return was filed by a tax professional, you may ask that the audit be done at their place of business. To keep the auditor away from your office, you have to prove that an audit will be disruptive to your place of business.

Professional tax preparers (enrolled agents, CPAs, and attorneys) who submitted your tax returns can attend the audit for you.

The audit will commence with easy questions. The audit will then commence in earnest. One of the most important things to remember is never give the auditor more information than requested. Do not answer questions that are irrelevant to the tax return in question or bring documentation that weren’t requested on the notice. Answer questions courteously but with short answers and no further explanations. The more you say, the more you could alert the auditor to investigate you more.

After the audit, you will receive a copy of the auditor’s report. You can appeal to the auditor’s supervisor right there and then if you do not agree with the outcome. If the supervisor agrees with the outcome, you have thirty days to appeal to the IRS Appeals Division. If you’re still unhappy with the result, you can take your appeal to Tax Court.

Looking for a Tax Attorney to help you with your IRS audit? Conveniently situated in Florida, Darrin T. Mish may be able to help. Give him a call tollfree at (888) 438-6474. He represents clients with IRS Problems all over the United States.

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