Navigating an IRS audit can be a daunting experience, but understanding the different types of audits can help you prepare and mitigate any potential risks. The Internal Revenue Service (IRS) conducts three primary types of audits: mail audits, office audits, and field audits. Each type of audit has its own unique characteristics and procedures, and the type of audit you face will depend on the specific circumstances of your case.
1. Mail Audits: The Most Common Type
Mail audits are the most common type of IRS audit, accounting for approximately 75% of all audits conducted by the IRS. These audits are typically conducted through correspondence, with the IRS sending you a letter requesting additional information or documentation to verify the accuracy of your tax return.
Characteristics:
- Conducted through correspondence (mail or phone)
- Focus on specific items or issues on your tax return
- Typically involve requests for additional documentation or information
- Can be resolved without an in-person meeting
Procedure:
- The IRS sends you a letter outlining the specific issues or items they are questioning on your tax return.
- You have a limited time to respond to the letter and provide the requested information.
- The IRS will review your response and make a determination based on the information you provide.
- If the IRS determines that you owe additional taxes, they will send you a bill.
- You have the right to appeal the IRS’s decision if you disagree with their findings.
2. Office Audits: A More In-Depth Review
Office audits are more in-depth than mail audits and typically involve a face-to-face meeting at an IRS office. These audits are typically conducted when the IRS has more complex questions about your tax return or when they believe there may be significant errors or omissions.
Characteristics:
- Conducted in-person at an IRS office
- Focus on more complex issues or potential errors on your tax return
- May involve a review of your financial records and other documents
- Can take several hours or even days to complete
Procedure:
- The IRS will send you a letter inviting you to an office audit.
- You will need to bring all relevant documents and records to the audit.
- An IRS auditor will review your documents and ask you questions about your tax return.
- The auditor will make a determination based on the information you provide.
- If the auditor determines that you owe additional taxes, they will send you a bill.
- You have the right to appeal the auditor’s decision if you disagree with their findings.
3. Field Audits: The Most Comprehensive Type
Field audits are the most comprehensive type of IRS audit and are typically conducted at your home or business. These audits involve a thorough review of your financial records and other documents, and they can take several days or even weeks to complete.
Characteristics:
- Conducted at your home or business
- Involve a thorough review of your financial records and other documents
- Can take several days or weeks to complete
- May result in significant tax adjustments
Procedure:
- The IRS will send you a letter informing you that you have been selected for a field audit.
- An IRS auditor will visit your home or business and review your financial records.
- The auditor will ask you questions about your tax return and your business or financial activities.
- The auditor will make a determination based on the information you provide.
- If the auditor determines that you owe additional taxes, they will send you a bill.
- You have the right to appeal the auditor’s decision if you disagree with their findings.
Understanding the different types of IRS audits can help you prepare for and navigate the audit process more effectively. If you receive an audit letter from the IRS, it is important to respond promptly and provide the requested information. You may also want to consider seeking professional assistance from a tax attorney or accountant to help you through the process.
IRS AUDITS – Different types of IRS audits
FAQ
What is the most common type of IRS audit?
Which type of audit is the most serious and why?
Which filing status is most audited?
What are the different types of tax audits?
There are three significant types of tax audits that vary in severity. What taxpayers encounter depends on the tax return information gathered by the Internal Revenue Service. First is the correspondence audit. If the IRS sends you a letter requesting documentation or proof of the statement, your account has an ongoing correspondence tax audit.
What is the most common IRS audit type?
Correspondence audits are the most common IRS audit types. The Internal Revenue Service conducts this audit to request additional documentation from taxpayers. The commission performs this audit via mail or telephone and taxpayers.
What is an IRS audit?
According to tax laws, the Internal Revenue Service audit examines an individual or organization’s financial information confirming income and tax deductions accuracy. While some IRS audits come with penalties and fines, some are no big deal. After learning about the type of IRS audits, you’ll better understand what’s involved.
What are the 4 sub IRS audit types?
Next, we will be dealing with the four sub IRS audit types. What are the 3 types of audits? The three main audit types are internal audits, external audits, and Internal Revenue Service (IRS) audits. Certified Public Accounting (CPA) firms perform external audits while a company’s auditor handles internal audits.