IRS Tax Audit

What is the purpose of an IRS tax audit?

Really the IRS would love to audit everybody, but they can't. It would be too expensive and time-consuming. So instead they audit only a small percentage of the taxpayers. The strategy is that the fear of getting an audit will keep all the other taxpayers honest and not cheat with their taxes.

The words "IRS tax audit" makes you think of a scary auditor coming to visit you in your home or office, but many times it is not this way.

Most income tax audits are mail audits, where you correspond with the auditor by mail. It is the best kind of audit because you don't have to answer immediately so the auditor can't catch you offhand. You usually get 30 days to respond and you can also respond by fax. This method is used for simple tax returns.

Office audits are conducted in the IRS office where you have to bring the documentation to the office by appointment. Smaller businesses or slightly complicated tax returns will get an office audit.

Field audits usually take place in your place of business or home. It's the place that most proof is located. Corporations or larger businesses will most likely get the field audit. You can ask the IRS to change the time or place of the audit.

It is a good idea to get someone to represent you if you have a field or office audit.

Behind the scenes audit is when the IRS does not ask for information from you. They simply use the information they already have like your tax return, form W2 or form 1099 that they have on record.

Many times if there are no changes you are not even aware about it. If you're expecting a refund and it is done before your refund was processed then you will realize the processing delay.

Other times the only indication that they conducted an audit is the tax bill (on rare occasions an additional refund check.)

What are your chances for getting an IRS tax audit?

Depending on your earnings your chance for your tax return being audited ranges from less than one percent to over one percent. That does not sound like a large chance, but over the years you do have a fifty percent chance of being audited. You just don't know which year you'll be one of the lucky ones, so I guess you always need to be prepared.

How does the IRS tax audit process work?

  • The auditor sends you a letter asking you to send documentation that support certain claims on your tax return.
  • You reply with your documentation.
  • The auditor sends you the decision.
  • You either agree to the decision by signing the form 4549 (and pay if necessary) or disagree by providing documentation and explanation why you disagree.
  • The auditor sends a new decision with a letter that tells you your appeal rights.
  • If you still disagree with the auditors decision you have 30 days to appeal it.

For more information see:



How to avoid tax audit

How to get tax audit help

IRS tax audit tips

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Read the latest updates about refund delays here.

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