What is the Audit Process?

The IRS determines if your tax return was prepared right through a correspondence, face-to-face, or field audit.

Every tax return filed is examined with its deductions compared to averages through the DIF or Discriminate Function System. You're likely to be audited if your DIF score is more than normal.

Correspondence audit is done by mail, meaning you will get a notice asking for additional information about some items on your tax return. Quickly comply and mail documents through certified mail if the IRS requests you to submit documents to support your tax return, but don't send originals.

If you are told that you owe more taxes because of errors, compare your tax return with the information on the IRS notice before you settle the added tax because the IRS makes mistakes too. If you don't agree with the notice, you have to appeal in 60 days.

If the IRS requests a face-to-face audit, you will be requested to visit the auditor's office or in the case of a field audit, the auditor will visit your home or place of business. If your tax return was prepared by a tax professional, you can ask that the audit be conducted at their office. Show that the audit would be disruptive to your business to keep the auditor away from your office.

Professional tax preparers (enrolled agents, CPAs, and attorneys) who prepared your tax returns can attend the audit instead of you.

Unnecessary disclosure of information should be avoided. Documentation that were not initially required should not be presented and questions that don't pertain to the tax return being audited shouldn't be answered. Give short answers with less explanations politely because saying too much information will give the IRS cause to audit you more.

You can appeal to the auditor's supervisor right there and then if you don't agree with the audit's decision. You may appeal within thirty days to the IRS Appeals Division if the outcome is still not acceptable to you. If you are still unhappy with the outcome, Tax Court is your next stop.

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Originally posted 2008-01-18 05:07:31. Republished by Blog Post Promoter

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