The IRS pegged you for a tax audit. Now what?
Below, we’ll review some basics.
If you got a letter, are freaking out, and need to speak with someone, get in touch with our tax law team. We’ll guide you through the process and get you safely to the other side.
What is a Tax Audit?
Primarily, during an audit, the IRS looks into the the subject’s federally-filed taxes. If the review proves that the party initially filed a sound tax return, the IRS won’t dig further. However, if agents find errors, either innocent or purposeful, the taxpayer may incur interest penalties and fines.
Types of Tax Audits
There are different types of tax audits, each with specific requirements. A correspondence audit requires checks, receipts, and people mail documents to an IRS service center; local IRS outposts conduct local audits; field audits take place at a taxpayer’s home or place of business.
The most complicated type of audit is the Taxpayer Compliance Measurement Program (TCMP). It requires every part of a tax return to be supported by documents, including birth and marriage certificates. A TCMP audit is typically conducted to update the IRS’ computer scoring program data.
Reasons for a Tax Audit
Typical reasons for tax audits include:
- Inconsistencies between information on W-2s, 1099s and cash wages reported by employers and customers;
- High deductions relative to current income or inconsistent with previous years’ earnings;
- Entanglement with another individual or business that’s been audited;
- Unfiled tax returns;
- Above average withholding scores; and
- Random selection.
Tax Audit Process
The IRS informs parties by mail of impending audits.
All IRS letters or notices contain a number in the upper right-hand corner that references specific issues with the tax return.
Typically, document gathering is the first procedural step. If necessary documents are missing, request duplicates; tax auditors won’t accept excuses for missing or lost records. Moreover, mailed materials should be copies, not originals.
If the IRS audits you, hire a tax attorney. Never answer an IRS examiners questions without counsel. Contact Gordon Law Group at 847-580-1279. We can guide you through the process and get you safely to the other side. Our team also works with people struggling with back tax debt.Consult With A Tax Audit Attorney »