If You Are Audited

In our country, we have a voluntary compliance system of taxation. This means we report to the government our income and deductions and compute the tax due ourselves. To insure that the tax laws are followed and the deductions on a return are legitimate, the IRS has the authority to audit our tax returns. If you receive a letter from the IRS, before you call them, call your tax preparer!

Types of Audits

There are generally three types of audits:

• Correspondence Audit
  The IRS sends a letter asking you to verify certain items of income and deductions on your tax return. Generally, you can respond by mailing copies of your documentation. Never mail the original documents back to the IRS! If the IRS finds that you owe tax and you don't agree, you may request an office audit.

• Office Audit
  You receive a letter from a local IRS office requesting that you call for an appointment. The items in question will be listed in the letter. After making your appointment, you and/or your representative will take the records into the IRS office, and there you will verify your deductions and discuss with the agent any points of law on which you may not agree. If an agreement is reached with the auditor, your case will be closed. If you don't reach an agreement, you may appeal.

• Field Audit
  This type of audit is normally used for businesses. The auditor will come to your home or place of business. A field audit may also be conducted in your Enrolled Agents' (EA's) office, an especially good idea. You will need to have all your records there, but your home or place of business will not be disrupted.