Are you concerned about being audited by the IRS? An IRS audit takes place when the Internal Revenue Service chooses to review a taxpayer’s accounts to verify that tax laws are being followed. As a preliminary caution, beware of phone scams as the IRS will always initiate a tax audit by mail. The IRS will not call to demand immediate payment or ask for a debit or credit card number over the phone, nor will they threaten to bring in local law enforcement to arrest people. Threats like these are common tactics scam artists use to trick victims.
There are various types of audits that can occur. A Correspondence Audit means that the IRS needs additional documentation from you, and you will be asked to mail it in. This is the most common type of audit, and you will not have to meet with an IRS agent. Field Audits are generally done on businesses. In a field audit, an IRS agent will come to your business or home to look at your records. An Office Audit is just like it sounds. You will have to go to an IRS office to meet with an agent.
In recent years, the audit rate has dropped for individual tax returns. Listed here are the percent of individual returns examined by fiscal year according to the IRS Data Book:
Remember that while audits are rare, good record keeping will help you endure the audit process. A good rule of thumb is to keep records for 7 years. There are also things you can do to minimize your audit risk. It’s recommended that you seek the advice of your CPA or a tax attorney if you have concerns.