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Types of IRS Audits

If you are selected for an IRS audit, what should you expect? There are several types of IRS audits, of which the main types will be briefly discussed below.

Correspondence Audits

A correspondence audit is an audit that the IRS conducts via correspondence. The IRS will begin the audit by mailing a letter to the taxpayer outlining the various aspects of the tax return that will be examined. The taxpayer will then respond by sending correspondence including documentation and substantiation to the examining agent. The IRS agent will then examine the documents and make a determination in writing via a letter that will be sent to the taxpayer.

Office Audit

An office audit is an audit that the IRS auditor conducts in his or her office at the local IRS building. Also, the taxpayer will receive correspondence from the IRS auditor who will schedule a meeting with the taxpayer at the IRS auditor’s office. The meeting will typically last one or two hours. There typically will not be any follow up visits. Additionally, the taxpayer should compile all documentation to substantiate the positions on the tax return. Taxpayers can receive a substantiation amount of tax help from a Los Angeles tax attorney as to the correct strategy to choose to limit the effects of the audit.

Field Audit

A field audit is an audit conducted by an IRS auditor at the taxpayer’s office or the office of the taxpayer’s representative. The representative who can be a Los Angeles tax attorney will provide tax help and strategy to the taxpayer. A field audit can last anywhere between a month to several months, depending on the complexity of the taxpayer’s tax return. These audits can involve a significant amount of strategy to help business owners get through the audit with as few adjustments by the IRS auditor as possible. The IRS Internal Revenue Manual provides a resource of helpful information about the auditing procedures of the IRS. Moreover, the IRS centralized partnership audit regime presents unique considerations and challenges.

IRS Audit Procedures

The auditor will issue an information document request to you outlining the documents that the auditor is requesting. See our discussion on how to prepare for an audit here. Ready this document carefully to understand what issues may arise. Examine your return to determine if there are any potential issues that may arise and formulate a strategy early. Gather the documents and prepare them in an organized fashion. Moreover, the auditor may attempt to tour a business under examination and meet with the individual taxpayers.

Contact Us

An IRS audit can be a very scary and nerve-wracking thing. However, knowing what to expect and formulating an effective strategy can take the sting out of an IRS audit. A Los Angeles tax attorney can successfully guide your business through an IRS audit. Contact Disparte Tax Law today for a free consultation.