Last few years, IRS has been hiring massive number of IRS agents to conduct more aggressive in the number and sophisticated tax audits. At the initial audit stage, it is more likely to involve with civil audit, not the criminal. IRS will request for proof of deductions, income, or any items reported on your tax returns. IRS will also look for any signs of inconsistency such as lifestyle habits for signs of unreported income by reviewing records, asking probing questions, and etc.
An IRS audit is a review/examination of an individual’s or organization’s or accounts and financial information to ensure information is being reported correctly, according to the tax laws, to verify the amount of tax reported is accurate.
Selecting a return for audit does not always suggest that an error has been made. Returns are selected using a variety of methods, including:
• Low scores of your tax returns during computer screening
• Random selection
• Document matching
• Inside leads
• Related examinations – returns may be selected for audit when they involve issues or transactions with other taxpayers, such as business partners or investors, whose returns were selected for audit.
Should your account be selected for audit, you will be notified in two ways:
• By mail, or
• By telephone
The length of each audit varies depending on the type of audit, the complexity of items being reviewed, the availability of information being requested, the availability of both parties for scheduling of meetings and your agreement or disagreement with the findings. Based on my both side of experiences as a Revenue Agent and Representative, it could last few hours in one day or could last years.
An audit can be concluded in three ways:
- No change: an audit in which you have substantiated all of the items being reviewed and results in no changes.
- Agreed: an audit where the IRS proposed changes and the taxpayer understands and agrees with the changes.
- Disagreed: an audit where the IRS has proposed changes and the taxpayer disagrees with the changes. You will then need to pursue with appeal process.
If you have any income tax audit issue, we will represent you from the start to the end of the income tax controversy.