Some taxpayers find themselves on edge about the potential of an audit from the Internal Revenue Service. Concerns about whether they did their taxes right and how an audit could impact ongoing finances naturally leave some wondering when the IRS might come calling.
We want to alleviate some of those concerns and help taxpayers in Washington understand the audit process better. We previously talked about steps to take when you are audited by the IRS, but preparation and understanding the audit process allow you to avoid costly mistakes and get out of trouble.
Various types of IRS audits
There are various types of audits carried out by the IRS, and each one has a different level of seriousness. You will quickly understand the severity and intention of the situation based on what types of audits you are notified about.
Correspondence Audit – In this case, the IRS may just be simply doing a random audit or fixing small errors such as filing errors, missing documents, or calculation errors in your return. A correspondence audit is generally done entirely through letters and phone calls.
Office Audit – For office audits, you will report to an IRS office to speak with an IRS agent about the specifics of your return and any notable issues to be resolved. These are more serious as your presence will be necessary to directly address everything in a more immediate manner.
Field Audit – As the title suggests, a field audit is done “in the field.” This means an agent or multiple agents will come to your home or business to conduct the audit. Generally, a field audit is an indication of a serious issue as they are not as limited as other forms of audits are and can cover numerous issues that may result in significant penalties.
You do not have to take care of any of these audits on your own. It’s important to have a tax professional AND tax attorney by your side through the audit process. It’s also important to note that an audit can result in little to no change in your status – there is no guarantee any issues are found.
What to do and not to do when audited
Audits can be completely random – the IRS conducts hundreds of thousands of audits every year. There is no guarantee that you are being audited for any purpose other than the IRS ensuring their systems and data are up to date and correct.
When you are audited, it’s important not to panic and say anything that could get you in trouble. If you didn’t file a return you shouldn’t say “Oops, I forgot” or “I didn’t have time” – any admission of negligence could result in fraud charges. Instead, work closely with your tax attorney for an appropriate response.
If you get a summons for bank accounts then you should make sure you double-check your documents and ensure everything requested is provided in a timely manner. Any delay or mistakes in this process could raise some red flags and get you in additional trouble.
You also need to verify you’re actually dealing with the IRS. Review the details of any letter claiming to be from the IRS and understand when and how an IRS agent can show up at your doorstep. Do not get caught up in a fraud scheme purely because you are vulnerable to an audit.Most importantly – hire an attorney. You should not go through this process alone. Your finances are on the line and an experienced tax attorney can help you navigate the IRS audit process. Contact Robert V. Boeshaar if you are being audited by the IRS.
Robert V. Boeshaar Attorney at Law, LL.M.,PLLC
Latest posts by Robert V. Boeshaar Attorney at Law, LL.M.,PLLC (see all)
- Side Hustle No Longer Profitable? Hobby Loss Considerations - February 15, 2024