What is an IRS audit?

Written by on behalf of Robert J. Fedor, Esq., L.L.C. | May 14, 2015 5:03:24 PM

The words "IRS audit" can strike fear into just about anyone and result in a long, painful and difficult journey into your financial past or your company's financial transactions and reporting.

Perhaps some of the few bright spots in news of audits are the recent reports telling us that audits are becoming rarer. For the person or business just served notice that the IRS is going to review and examine their records, however, those reports are likely small consolation.
So what is an audit? The IRS describes it this way: it's a review of an individual's or organization's "accounts and financial information to ensure information is being reported correctly, according to the tax laws, to verify the amount of tax reported is accurate." The IRS notes that just because you have to undergo an audit "does not always suggest" that you have done something wrong or made grievous mistakes. Sometimes you're simply unlucky and have been selected for an audit at random.

Other times, a process known as document-matching is used to select a person for an audit. The IRS has a form, such as a W-2 or 1099 that doesn't match other information it has about your finances. You can also be selected if someone you engage in business with, such as a partner or investor, is being audited. Your financial records can reveal details about their reporting or accounts, or vice-versa.

Regardless of how you're selected, discuss the matter with your Ohio tax attorney, so that you can understand the implications of the audit. You can also begin to form a response and gather and prepare documentation with the help of an experienced attorney who has helped other navigate this complex process.

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