About to Be Audited by the IRS? Here Are a Few Things to Keep in Mind
IRS audits can make or break a business and the professional reputations associated with those who are audited. As the leading tax attorney serving businesses and individuals in Philadelphia, we’d like to offer some advice to those who are about to be audited by the IRS.
The IRS implements several techniques to help them to determine the accuracy of tax returns. Computers are used to verify the calculations submitted on each tax return. If these calculations are deemed to be incorrect, a tax adjustment notice is issued to the taxpayer.
The IRS requests correspondence audits to verify the examinations or deductions shown on a tax return. Office audits are often conducted in local IRS offices. Sometimes, field examinations are conducted when IRS agents are investigating more complex tax returns and cases.
Correspondence audits are used by the IRS to obtain more information from the taxpayer about issues raised from a tax return. These audits focus on narrower issues than office audits and are often conducted by mail. Examples of items that can be verified via a correspondence audit include charitable contributions, medical expenses, taxes, interest rates, and simple miscellaneous deductions.
Field audits can be initiated by a telephone call or a letter from a Revenue Agent. Although visits from Revenue Agents without prior notification are rare, they can happen at any moment. These field audits occur at the taxpayer’s place of business instead of the IRS office. In some circumstances, the taxpayer can request a transfer to a different area of examination.
During office audits, the IRS will interview the taxpayer and inspect all of their tax records at the IRS office. The office audit is initiated via a letter to the taxpayer requesting their attendance at an IRS office on a specific date. The letter will list the documents that the taxpayer must bring to the audit. The taxpayer can request to change the date of the audit if it’s not suitable. The most frequently examined areas in an office audit include employee expenses, charitable contributions, interest, moving expenses, and rental income and expenses.
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