A tax audit is an examination of your tax return by the Internal Revenue Service or a state tax authority. It can be stressful, but it is the best way to avoid penalties and ensure that your taxes are accurate. There are several types of audits and it can be beneficial to know what they are before going through the process.
During an audit, issues may arise regarding the taxes you owe or deductions you claimed. An experienced auditor will review your return to determine if there are any errors or omissions. While any factual differences should be resolved during the audit, any legal differences may require an appeal. Once the audit is complete, the Department will notify you of any issues found and the amount owed. If any issues are not resolved, they will be assessed and may be the basis for further investigation.
A tax audit can be either a face-to-face or mail-based audit. Face-to-face audits are conducted at the IRS’s office. A field audit, on the other hand, takes place at a taxpayer’s home. Depending on the nature of the audit, you may receive a letter requesting further documentation. If you submit sufficient proof, the audit may be resolved.
If an audit is conducted by the IRS, you may be asked to provide more information. For instance, you may be asked to produce personal documents related to the tax return. In case you need time to organize, you can request a postponement. You may also want to review your Taxpayer’s Bill of Rights.
Once you receive a letter, it is important to know what your rights are. If you have a question or a disagreement regarding an audit, you should consult a tax attorney in your area. A tax attorney can help you protect your rights throughout the entire audit process. They can help you get the best outcome possible.
Although it is possible for you to represent yourself, it is best to hire an attorney. This way, you will be able to challenge the findings of the audit and be able to challenge them. IRS audits can take six months to a year, and you have the right to appeal if you feel you have an issue.
Depending on the type of audit you receive, you may be able to negotiate with the IRS or meet with the audit manager and try to work out a settlement. In some cases, the IRS will even agree to make some changes to your tax return if you agree with their findings. If you cannot reach an agreement, you can file a formal appeal in the Tax Court.
During an audit, the IRS may visit you at home or at your CPA’s office. The auditor will review your tax return details and may ask to see some paperwork. For instance, if you run a business, the auditors may want to examine your inventory and records.