The IRS performs audits to verify the accuracy of tax returns and insure that taxpayers are in compliance with tax law. Many people are afraid of being audited but it should be known that audits don’t always lead to any penalties like fines, additional taxes owed, or other legal action. If you have received a notice from the IRS that you will be audited, it is in your best interest to speak with a tax attorney to go over what to expect, possible outcomes, and your legal rights and obligations.
The IRS may use the following methods to select individuals or businesses for an audit:
- A review of tax return information,
- Information gathered from another agency, or
- Through as a randomly computer generated audit.
An audit can be conducted in two ways – as a “desk audit” or as a “field audit”. A desk audit is conducted in an IRS office whereas a field audit is conducted at the individual’s home or place of business. No matter the method, the IRS will review the same type of information. You can be expected to provide the following documents:
- Federal tax returns for current and previous year
- State tax returns if they apply for current and previous year
- W2s, 1099s, or other documents to verify the data entered on your returns
- Proof of city and county taxes paid, if applicable
- Proof of sales tax exemption
- Resale certificate
- Property records
- Business purchase and sales receipts
- Medical expenses
- Receipts for tax deductions
This list in not comprehensive so be sure to have access to other documentation that may be requested if it pertains to your filed return.
If you are notified of an impending audit it is important to remember that you do have rights. You have the right to:
- Legal representation
- Clear communication from the IRS
- Be informed of what is required of you so that you are able to abide by tax law
- Professional assistance from the IRS
- Expect that the personal data pertained in your documentation will not be disclosed without your authorization
- Expect the IRS to comply with search and seizure protections and due process rights
- Expect the IRS to take into consideration personal circumstances that may have affected your ability to provide the necessary documentation in the allotted time frame
- Have documentation reviewed if circumstances may affect your liability in an audit
- Know when the audit has been completed
- Be informed of the time you have to challenge the results of the audit
- Pay only the actual tax due (including penalties or interest that may have accrued)
- Appeal the IRS’s decision
- Receive, in writing, the final decision of the IRS
Be protected when going through an audit and reach out to our Tax Lawyers if you have received notice of an audit. Not only will we help guide you through the process and reduce the stress that can come with an audit but we will ensure that you are aware of your rights throughout the process.