The IRS has the ability to randomly select one of your tax returns to verify that everything submitted is correct. These random checks are to cut down on tax fraud, but if you’ve made an honest mistake with reporting your numbers then you could still be subject to a variety of penalties and fines.
Many taxpayers rush through the audit process in an attempt to get the IRS’s eyes off their business as soon as possible, but this is often a bad idea. Unless you give the IRS all of the information exactly as they ask for it, it could delay the completion of the audit and might prompt them to look further into your tax history. This is why it’s important to seek a tax professional to help represent you and defend your rights.
Types of IRS Audits
There are generally three different types of IRS audit.
Correspondence audits mean that the IRS needs additional documentation. These are typically done via mail and are the most common type of IRS audit. You won’t need to meet with an IRS agent for this.
Office audits involve meeting with an IRS agent face-to-face in an office.
Field audits are often done on your premises. An IRS agent will visit your home or business to look at your records and compare them to your tax return.
Regardless of the type of audit you’re facing, it’s important to understand your rights and the tax audit process to get a better understanding of the situation. The easiest way to manage this is to contact a tax professional to help represent you and defend your rights, but to also streamline the process so that you’re less likely to face any issues in the future.
Understanding The Tax Audit Process and Your Rights
It’s a good idea to understand the tax audit process and your rights as a taxpayer when you are picked for an audit. This will not only make the process smoother but can also increase your chances of avoiding a future follow-up. In most cases, the IRS will send you a notification letter to inform you that you’ve been chosen for a tax audit. This letter will contain detailed steps on what you should do to support the audit, and you’ll also be given a deadline to reply back to the IRS.
If you fail to respond to the letter, they’ll reconstruct your income situation based on existing information it as. This likely means more taxable income and more taxes that you will owe. You’ll be given a 90-day notice before the IRS begins collecting this tax and you’ll be entitled to appeal this. If you don’t, they’ll begin collecting additional taxes based on their own information.
The IRS will make different requests based on your circumstances. The letter often focuses on a couple of items from your tax return and you’ll be asked to provide further documentation to support your claims. This will often lead to no major changes made to your tax return. However, the IRS might instead suppose changes to your tax return and you can accept or appeal against this. This will require a meeting with a manager at the IRS office to discuss and resolve the conditions.
The Right to Be Informed
Taxpayers have the right to know what the IRS expects of them in order to comply with tax laws. This includes clear explanations of laws and IRS procedures in all tax forms, instructions, notices, publications, and correspondence.
The Right to Quality Service
Taxpayers have the right to know what the IRS expects of them in order to comply with tax laws. This includes clear explanations of laws and IRS procedures in all tax forms, instructions, notices, publications, and correspondence.
The Right to Confidentiality
Taxpayers have the right to expect that information they provide to the IRS will not be disclosed unless first authorized by the law or the taxpayer. They can expect that appropriate actions will be taken against IRS employees that wrongfully use or disclose taxpayer information.
The Right to Retain Representation
Taxpayers have the right to retain a representative of their choice when dealing with the IRS. They can seek assistance from a Low-Income Taxpayer Clinic if they cannot afford representation.
The Right to a Fair and Just Tax System
Taxpayers have the right to expect the tax system to be just and fair, considering facts and circumstances that could affect underlying liabilities. This includes expecting assistance from the Taxpayer Advocate Service if a taxpayer is unable to resolve tax issues due to financial difficulty.
The Right to Pay No More than the Correct Amount of Tax
Taxpayers have the right to pay only the right amount of tax that is due including penalties and interest.
The Right to Privacy
Taxpayers have the right to expect complete privacy when dealing with the IRS. They can expect that any of the IRS’s actions will be lawful and not intrusive.
The Right to Challenge the IRS’s Position and Be Heard
Taxpayers have the right to raise objections and challenge the IRS’s claims. They are able to provide additional documentation in response to the IRS’s proposed actions.
The Right to Finality
Taxpayers have the right to know the amount of time they have to challenge the IRS’s claims and position. They also have the right to know the amount of time the IRS has to audit a particular tax year or collect a tax debt, and also when the IRS finishes an audit.
The Right to Appeal an IRS Decision in an Independent Forum
- Taxpayers have the right to a fair and impartial administrative appeal of the majority of IRS decisions. They also have the right to take courses to court if needed.
Tax Audit Help
Getting audited is one of the biggest fears of taxpayers. If you are selected for an audit, it is required that you work through it with the taxing authorities by only providing the exact information they want and nothing else (to limit the possibility of them looking further into your tax return). Many times an audit will mean that additional taxes are owed but at times the audit can result in no more taxes owed or even a tax refund.
How We Can Help You With an IRS or State Tax Audit
Our tax professionals can provide assistance in not only dealing with a tax audit but also resolving any negative consequences of an audit. Below are the basic steps our tax team will take to ensure the best possible outcome for your tax audit situation.
- Provide you with a detailed explanation of the audit notice or notices that you received.
- Analyze your tax return to see if something was actually done in error. If it was, we will provide corrective action to get your tax return back into compliance.
- Help provide documentation that may be needed for support in the audit.
- Further analyze your tax returns to determine if you have taken all possible tax deductions and tax credits.
- Provide you with the options you have if you cannot pay taxes owed in full.
Why Select Us for Tax Audit Help?
Our experienced tax team will work to get you the best possible outcome for your tax audit situation. We specialize in dealing with complex tax problems and no matter what the outcome of your audit is we will ensure that you will be back into full compliance with your tax situation when you are done, even if you cannot pay the additional taxes owed in full (Read more about our tax settlement service).
