Tax Tips & Insight
Understanding IRS Audit
What to expect and how to prepare if the IRS audits your return
An IRS audit doesn't have to be scary. Understanding the audit process, types of audits, and how to respond can help you navigate the situation with confidence and minimize stress.
Types of IRS Audits
Correspondence audits - handled by mail, typically for simple issues
Office audits - conducted at an IRS office, usually for more complex issues
Field audits - conducted at your home or business, most comprehensive
Taxpayer Compliance Measurement Program (TCMP) - random audits for statistical purposes
Pro Tip:
Most audits are correspondence audits - the simplest type to handle.
Why Returns Are Selected for Audit
Common triggers include:
High deductions relative to income
Business losses year after year
Large charitable contributions
Cash-intensive businesses
Random selection
Information matching issues (W-2s, 1099s)
Being audited doesn't mean you did anything wrong - many audits are random.
How to Prepare for an Audit
Gather all relevant documents: receipts, invoices, bank statements, and records.
Organize documents by category and year.
Review your tax return to understand what's being questioned.
Don't provide more information than requested.
Consider hiring a tax professional to represent you.
During the Audit Process
Respond promptly to all IRS requests.
Be professional and cooperative, but know your rights.
Provide only the documents requested.
Keep copies of everything you send to the IRS.
You have the right to representation by a tax professional.
After the Audit
The IRS will issue a report with their findings.
If you agree, you'll pay any additional tax, interest, and penalties.
If you disagree, you can appeal the decision.
Taxcodes LLC can represent you during an audit and help ensure the best possible outcome.
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