If you have recently received a letter from the IRS indicating that you have been selected for an audit, it is natural for you to be nervous and stressed. There are several different types of audits, each with different ramifications for your personal or business taxes.
After the headache of an IRS audit there may be additional fines, penalties, or interest payments due. Knowing how to expedite the audit you are facing may help you limit financial consequences.
Four types of audits
There are many types of audits, but the following are common IRS tax audits:
- Correspondence audit: a simple question regarding a deduction or a mistake on a form. You may respond through mail. Often resolved after a telephone conference
- Office audit: if the IRS has additional concerns or finds new issues they may ask you to respond to questions in person at an IRS office or other location. Typically resolved on the day of the meeting
- Field audit: if the IRS is not satisfied with your responses, they may appear at the premises of a business or home office to ensure that it meets the appropriate requirements or to find the documentation they require. Typically, the most intrusive of all audits
- Random/ Taxpayer Compliance Measurement Program audit: if the IRS has identified a major trend in several years’ worth of taxes, if you are self-employed or if you are randomly selected for statistical purposes, you may be audited. Large tax deductions often trigger an audit
Always remember that the IRS will only ever begin an audit by sending you a letter through certified mail. They will not call you or email you.
The IRS reminds you that you have the following rights:
- To ask for identification from IRS agents and to record their badge numbers
- To ask why you are being investigated and consequences of non-compliance
- To be treated respectfully and professionally
- To have tax matters remain confidential
- To appeal any findings or charges
- To legal representation for any kind of audit and at any stage of an audit