During an IRS audit, the Internal Revenue Service or IRS evaluates your finances to ensure all aspects of your tax return are correct. Most audits happen within a year or two, but the IRS can go back three years based on the due or filing date of the return. For significant mistakes such as intentional tax fraud, the IRS may examine returns for at least six years.
To learn about the three types of IRS audits and the documents you may require for an audit, please check out the given discussion.
Types of IRS Audits
- Office Audits
According to the best payroll tax audit attorney, you have to visit the IRS office for one-on-one interaction with the auditor during an office or desk audit. Visiting the office lets you show your documents and explain what they contain. Office audits are common for individuals with complex income tax returns or excess paperwork. The letter you receive from the IRS will have the contact details and instructions on how to organize a visit.
- Correspondence or Mail Audits
A correspondence or mail audit requires you to send your financial records and documents through mail. This is the most common audit.
The initial notice you receive from the IRS will inform you what to send and where to send it. Please use certified mail or a similar service with a tracking number to make sure all your documents get delivered without hassle.
If you plan to submit several documents, please organize them by the type of expense or income they depict and by the year. You must include a description or summary of the documents you are sending.
- Field Audits
Field audits happen when a representative of the IRS visits you to go through your financial documents. Field audits can happen at your house, workplace, or accountant’s office. The first letter will have contact details that you may use to set up the time and location.
Field audits are common for organizations and businesses that have excessive documents to carry to the IRS office. They do not, however, happen for taxpayers with complex tax situations.
Documents You May Require for IRS Audits
The documents you have to show during the IRS audit depend on your particular situation, but there are a few records that the IRS requests under all circumstances. Please send copies and not the original papers. It is best to provide a written summary that describes how every document is related to the audit.
- Receipts
- Bills
- Legal papers
- Tickets
- Diaries or logs
- Records of job search
- Dental and medical records
- Income documents
- Proof of theft or loss
According to the experts working for a reputed tax resolution law firm, the Internal Revenue Service utilizes a computer algorithm to evaluate tax returns every year. The algorithm flags your return if it contains data radically different from last year – like if your income increased by approximately $100,000 or if your return has products that are uncommon in your financial situation.
Small transcription and mathematical errors, filing late or early, claiming no or many deductions and credits, requesting a filing extension, receiving a tax refund, etc., do not cause audits.
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