The Internal Revenue Service has released its work plan for the coming year outlining its priorities for examinations and audits of tax-exempt organizations. See article about the IRS Audits of Tax Exempt Groups.
Charitable and other nonprofit organization may received a letter or phone call from IRS Exempt Organizations (EO) Examinations saying it had been selected for a review of its returns. The type of review is one of the following:
- Audits: The IRS conducts two types of audits–
- Field audit (or examination): If the initial contact letter sets up an appointment for an IRS agent to visit the organization’s premises, the IRS is conducting a field audit.
- Office/correspondence audit (or examination): If the letter asks you to deliver documents to an IRS office by mail, the IRS is conducting a correspondence audit.
- Non-audits: If the letter indicates the IRS is conducting a compliance check, then you’re not being audited.
An audit starts with the initial contact and continues until a closing letter is issued. A compliance check or compliance check questionnaire starts with the initial contact. The IRS may contact the organization again if the IRS needs further information, or if the organization does not respond to the compliance check or questionnaire. The IRS typically issues a closing letter at the end of a compliance check, but not at the end of a compliance check questionnaire.
During a field audit, the revenue agent will review requested items, including:
- books and records
- annual returns
- related returns, e.g., employment tax returns, Form 1099 series information returns
- prior and subsequent year returns
If your charitable organization has received an audit notice, contact the IRS tax attorney law firm of Disparte Tax Law.