Have you received an IRS audit notice? While millions of taxpayers are audited every year, the concept that the IRS would like to take a closer look at your taxes can be nerve-wracking.
>> Click Here For a Complete Guide to the IRS Audit Process
Even taxpayers that have nothing to worry about because they have filed their taxes in a timely and honest manner may be frightened of an impending IRS audit. Hiring a tax resolution company like Top Tax Defenders for audit representations can help ease the anxiety of an IRS tax audit.
Watch Top Tax Defenders CEO Jayson Mullin explain why you don't have to take on the IRS alone.
In a nutshell, an IRS audit is when the IRS notifies a person or business, usually by a notice in the mail, that they want to take a closer look at their financial information and records to make sure a filed tax return obeys all tax laws and regulations. Though some audits are done face-to-face, the majority of IRS audits are correspondence audits through the mail.
If your tax return is selected for audit, you may consider hiring audit representation, like Top Tax Defenders. Having professional representation can help you feel assured that you are prepared with necessary documents and filling out any additional paperwork correctly, which can make the audit experience go faster and be completed with fewer headaches.
How long it takes to complete an audit can depend on several things, such as the complexity of the tax return, the extent of issues under review, and the availability of both the taxpayer and IRS personnel. Some audits are finished within a few months while others may go on for a year or longer.
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Though we don't know exactly why certain returns are selected for closer examination, there are many factors that seem to contribute to having your return audited, including things like:
Whatever the reason for selection, you have some ability to make the process go more smoothly by addressing any identified issues promptly and transparently. You should respond promptly and respectfully with correct and complete documentation. You should cooperate fully with requests for documentation or information, seeking professional guidance if necessary.
>> Click Here to Learn 10 Easy Ways to Avoid an Audit
The Internal Revenue Service (IRS) conducts three main types of audits:
Correspondence Audit: Typically 75-85% of all audits are correspondence audits. This type of audit is conducted entirely through mail correspondence. The IRS will send you a letter requesting additional information or clarification on specific items on your tax return, such as deductions or income sources. You respond by providing the requested documentation or explanations.
Office Audit: An office audit requires you to meet with an IRS auditor at an IRS office. During the meeting, the auditor will review your tax return and may ask questions or request additional documentation. Office audits typically involve more complex issues than correspondence audits but are less extensive than field audits.
Field Audit: A field audit is the most comprehensive and intrusive type of IRS audit. An IRS agent will visit you at your home, place of business, or accountant's office to conduct an in-depth examination of your tax return and financial records. Field audits are typically reserved for cases involving significant discrepancies or suspected tax evasion.
Each type of audit varies in terms of complexity, level of involvement required from the you, and the potential for scrutiny of financial records.
>> Click Here to Learn How to Deal with a Correspondence Audit
You will be notified of what documentation the IRS would like beforehand, so that you may prepare for a face-to-face meeting, or fill out correspondence audit paperwork. The IRS may be examining the entirety of your return, or they may only want clarification for a specific part of the return. For example, if you own a small business and have been continuously reporting a loss, and therefore no tax liability, for the business, the IRS may want further proof of your losses. This could include everything from rent receipts and utility statements, to a detailed record of customer billings.
You should organize and prepare several pieces of documentation after you receive notification of an audit. Some of the documentation that you might be asked to supply the auditor with include:
If you are missing any records, you should find or replace the missing records as quickly as you can, particularly those that should have been submitted with the tax return being audited. You should provide copies of any records requested and keep the originals for your own use.
>> Click Here to Learn More About What to Expect During an Audit
Though you do not have to hire anyone to represent you in an IRS audit, depending on the complexity of the case and the issues involved, having a professional on your side can take the stress out of an audit situation. Here are some of the tax professionals that offer unlimited representation with the IRS:
Choosing the right representation depends on the complexity of your tax situation, the nature of the audit, and your preferences for legal versus financial expertise. In some cases, a combination of these professionals may be beneficial for comprehensive representation during an IRS audit. Top Tax Defenders has all these types of experts who can help with your tax audit.
>> Click Here for Tips on Hiring Audit Representation
Most audits end in a change to the return. This could be in favor of the taxpayer, or the IRS; the IRS does not necessarily target taxpayers that may owe them more money. You could walk away from an IRS audit being owed additional tax refund money.
While only about one percent of taxpayers are audited per year, you may find yourself in that minority. Instead of going through the stressful process of an IRS audit alone, seek audit representation from an experienced tax firm. Top Tax Defenders has 27 years of experience with the IRS, and knows what to expect from an audit.
>> Click Here to Read Real-Life Success Stories from Our Clients
An IRS audit is a review of your financial records and tax return to verify that everything was filed accurately and in compliance with tax law. The IRS notifies you by mail in most cases. Audits can be triggered by discrepancies, unusual deductions, or random selection, and can range from a simple mail exchange to an in-person examination.
Common reasons include math errors, unreported income, unusually high deductions or credits, being self-employed, owning foreign assets, reporting continuous business losses, or not having filed returns in prior years. Some returns are also selected randomly through the IRS's computerized screening process, but selection doesn't always mean something is wrong.
The IRS conducts three types of audits. A correspondence audit is the most common, making up 75–85% of all audits, and is handled entirely by mail. An office audit requires you to meet with an IRS agent at an IRS office. A field audit is the most intensive, with an IRS agent visiting your home, business, or accountant's office to review your records in person.
The IRS will specify what it needs, but commonly requested documents include W-2s and 1099s, bank records, dividend and interest statements, proof of deductions and expenses, charitable contribution records, and retirement account contributions. Always provide copies and keep the originals. If records are missing, work to replace them as quickly as possible.
It depends on the complexity of the return and the issues under review. Some audits are resolved within a few months. Others, particularly field audits or cases involving significant discrepancies, can take a year or longer. Responding promptly and providing complete documentation is the most reliable way to shorten the process.
Most audits result in a change to the tax return. That change can go either way. You may owe additional taxes, or the IRS may determine you are owed a larger refund. A no-change outcome is also possible. The IRS does not exclusively target taxpayers who owe more money; audits are a verification process, not an automatic bill.
No. You have the right to have a qualified professional represent you before the IRS. Tax attorneys, CPAs, and enrolled agents are all authorized to handle audit representation. You are not required to attend audit meetings yourself if a representative is handling your case; they can communicate directly with the IRS on your behalf.
Audit representation means hiring a qualified tax professional to handle your IRS audit on your behalf. They gather and organize your documentation, communicate directly with the IRS, respond to information requests, attend any meetings or hearings, and negotiate outcomes. Having representation reduces errors, prevents you from volunteering damaging information, and typically leads to faster resolution.
A tax attorney is best for complex cases, legal disputes, or situations that may involve litigation, as communications are also protected by attorney-client privilege. A CPA specializes in accounting and financial records, making them well-suited for return preparation issues. An enrolled agent is specifically authorized by the IRS to represent taxpayers and focuses on tax compliance and IRS disputes. All three can represent you in an audit.
Yes. The IRS selects some returns for audit through random computerized screening with no indication of wrongdoing. Even honest, accurate filers can be audited. In these cases, professional representation helps you respond clearly and efficiently, reducing the time and stress of the process.
Do not ignore it. Respond by the deadline stated in the notice. Read the notice carefully to understand exactly what the IRS is questioning. Begin gathering the documents requested. Avoid contacting the IRS directly before understanding what is being examined. Consider hiring audit representation, especially if the notice involves complex issues, significant sums, or a face-to-face audit.
File on time, report all income accurately, avoid unusually large or unsupported deductions, double-check math, and keep thorough records of expenses and contributions. If you are self-employed, maintain clear separation between personal and business finances. Consistency between your return and third-party documents, such as W-2s and 1099s, is one of the most effective ways to avoid triggering a review.
