When it comes to taxes, for individuals and business owners, few words evoke as much fear and anxiety as the word audit. This time of year, as taxpayers prepare to file their 2014 tax returns, the idea of being targeted for an IRS audit is especially terrifying.
While the IRS claims the audit selection process is random, in previous blogs we've discussed things that may increase the likelihood of being selected for an IRS audit. Regardless of why an individual or business owner is selected, when facing an audit it's important to understand the process, certain tax laws, as well as one's rights.
A taxpayer will receive notice that he or she has been selected for an IRS audit via a written notice or by telephone. Upon notification, the IRS will provide a list of records which are to be reviewed and examined. In many cases, an IRS audit is conducted entirely via written communication, but some audits or parts of the audit process may involve an IRS agent visiting a taxpayer's home, office or place of business.
Many people panic when they learn they are being audited. It's important to note, however, that being selected for an audit doesn't mean that an individual has done anything wrong and some audits result in no tax changes. Taxpayers are advised, therefore, to do their best to comply with all audit requests.
Numerous factors may impact how long an audit takes. For example, business audits are likely to take longer as are those that involve individuals with many or a complex portfolio of assets. Additionally, the length of an audit is largely determined by whether or not requested documents are readily available as well as any issues or discrepancies that are uncovered.
In general, when it comes to the IRS, most taxpayers feel powerless. It's important to note, however, that taxpayers have rights. In our next post, we'll review some of these rights and, specifically, how they relate to the audit process.
If you are the subject of an IRS audit or need tax audit help, you may need to speak with an attorney:
Source: IRS.gov, “IRS Audits,” March 12, 2015
