A tax audit is a term used to describe the IRS’s examination of a particular tax return. During a tax audit, IRS employees closely examine a taxpayer’s income and deductions to ensure that they are accurate. There are three main types of tax audits: mail audits, office audits, and field audits.
Mail audits are the simplest and most common type of audit, as they can be conducted completely by mail and do not require an in-person meeting. Generally, the IRS will send notification of the audit and then request additional documentation to substantiate items reported on a tax return. Usually, audits will only be conducted on returns that were filed within the last three years and if the taxpayer is able to submit the necessary proof, the audit will usually be concluded.
Field audits are conducted by IRS agents who visit the taxpayer’s home or place of business. These types of audits are very thorough and often conducted when the IRS has concerns about more than one item on a taxpayer’s return.
Office audits are conducted via in-person interview at a local IRS office and are more in-depth than mail audits. These types of audits require taxpayers to provide the IRS with specific information, such as business records and personal bank statements. Although it is not required, taxpayers have the right to bring an accountant or lawyer to represent their interests at the meeting.
If, after conducting an audit, the IRS determines that a taxpayer’s supporting documentation and explanations are satisfactory, it will not make any alterations to the tax return. However, if the IRS does discover a problem, it can propose changes to the return, at which point the taxpayer can either accept the changes or challenge the auditor’s assessment. If the taxpayer agrees, he or she will be required to sign an examination report and create a payment plan. Taxpayers who disagree with the results of an audit can set up a conference with an IRS manager who will review the case or can request a formal appeal.
If you were recently notified that you will be audited, please contact one of the experienced tax audit representation professionals at our CORE Oklahoma City office by calling 405-288-1206. A member of our Lawton team is available at 580-353-2376, while a Tulsa representative can be reached at 918-209-3441.