If you are one of the unlucky 1% of individuals that get audited every year, chances are there is a little fear and nervousness running through the mind. Without question your very best source of representation will be a former IRS Audit Manager. Our firm Fresh Start Tax is comprised of former IRS Agents, Managers and Instructors. We know everything that will take place and actually conduct a pre audit before the actual audit occurs. Call us at 1-866-700-1040.
The Audit Process
An IRS audit is a review/examination of an organization’s or individuals accounts and financial information to ensure information is being reported correctly, according to the tax laws, to verify the amount of tax reported is accurate.
How does your return get selected for the Audit Selection?
Selecting a return for audit does not always suggest that an error has been made. Returns are selected using a variety of methods, including:
Random selection and computer screening – sometimes returns are selected based solely on a statistical formula.
Document matching – when payor records, such as Forms W-2 or Form 1099, don’t match the information reported.
Related examinations– returns may be selected for audit when they involve issues or transactions with other taxpayers, such as business partners or investors, whose returns were selected for audit. 1.4 million tax returns are selected for mail correspondence alone
Audit Methods used by the IRS
An audit may be conducted by mail or through an in-person interview and review of the taxpayer’s records. The interview may be at an IRS office (office audit) or at the taxpayer’s home, place of business, or accountant’s office (field audit). The IRS will tell you what records are needed. Audits can result in no changes or changes. Any proposed changes to your return will be explained.
How will I be notified of a tax Audit
Should your account be selected for audit, you will be notified in two ways:
By mail, or
By telephone
In the case of a telephone contact, the IRS will still send a letter confirming the audit. E-mail notification is not used by the IRS.
What are your right during an Audit?
A right to professional and courteous treatment by IRS employees.
A right to privacy and confidentiality about tax matters.
A right to know why the IRS is asking for information, how the IRS will use it and what will happen if the requested information is not provided.
A right to representation, by oneself or an authorized representative.
A right to appeal disagreements, both within the IRS and before the courts.
How long will the Audit take?
The length of each audit varies depending on the type of audit, the complexity of items being reviewed, the availability of information being requested, the availability of both parties for scheduling of meetings and your agreement or disagreement with the findings.
Audit Determinations
An audit can be concluded in three ways:
No change: an audit in which you have substantiated all of the items being reviewed and results in no changes.
Agreed: an audit where the IRS proposed changes and the taxpayer understands and agrees with the changes.
Disagreed: an audit where the IRS has proposed changes and the taxpayer understands, but disagrees with the changes.
What Happens When You Agree With The Audit Findings?
If you agree with the audit findings, you will be asked to sign the examination report or a similar form depending upon the type of audit conducted.
If money is owed, there are several payment options available. Publication 594, The IRS Collection process, explains the collection process in detail.
What Happens When You Disagree with the Audit Findings?
A conference with a manager may be requested for further review of the issue or issues. In addition, Fast Track Mediation or an Appeal request may be filed.
