The Types of IRS Audit Methods

There are various reasons why the IRS may audit you, including checking income discrepancies and deduction claims. Or you’re simply one of the unlucky ones that the IRS chooses for an audit randomly. Whatever the reason you’re being audited, it’s understandable to feel nervous about the IRS alerting you that they need to take a closer look at your tax return. Here’s a closer look at the different types of IRS audits:

Correspondence Audit

The most common tax audit method is performed by mail and does not require you to meet with an IRS agent. Correspondence audits are considered the simplest type of audit and typically involve a request from an IRS representative to provide more information about a specific part of your tax return. For example, you may be claiming a deduction, and the IRS needs you to send receipts as proof.

Another type of notice you may receive by mail would be one informing you that the IRS is proposing an adjustment. Whether you agree or disagree with the adjustment, you need to respond to the letter to avoid escalating the matter. You’ll have 30 days from the date of receipt of the correspondence to respond and provide the requested supporting documentation.

Office Audit

When the IRS has questions about a detailed and complex tax return issue, they will send a letter by mail requesting the taxpayer to come to a local IRS office for a meeting with an agent. If you’re invited to the office for an audit, be prepared to answer questions related to the issue and provide receipts and documentation. For example, if the IRS suspects underreported income, they may ask you about your employment, particularly if your financial position doesn’t match your lifestyle.

Field Audit

To prepare for a field audit, the IRS sends the taxpayer a notification letter letting them know which records need to be presented for review. Specially trained IRS revenue agents perform field audits when the audit requires a close and comprehensive look at financial records and in-person interviews.

When visiting a business, the field audit may even involve touring the facility and interviewing employees. The audit may also take place in the taxpayer’s home or their accountant’s office. The IRS agent will likely ask questions about bookkeeping and accounting procedures. Depending on the complexity of the review and interviews, field audits may last days.

Most correspondence audits are straightforward and can be resolved quickly by responding with the supporting documentation to substantiate your claims. And office audits typically only happen when the issue is too complex for a correspondence audit but is not so severe that it demands an on-site visit and interviews. Field audits are considered the most intrusive and nerve-wracking.

Are you facing an IRS audit? Whether you’ve been selected for a correspondence, office, or field audit, Golden Tax Relief can help protect your rights. We can help you prepare to respond to the IRS. Contact Golden Tax Relief today!

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