Tax Audit
What is an audit and why was i selected for one?
An IRS audit is an examination of an individual’s or organization’s financial records, accounts, and tax returns to ensure the information provided is accurate and complies with tax laws. Its purpose is to verify that the reported income and tax amounts are correct.
Being selected for an audit doesn’t necessarily mean there’s an issue. The IRS uses a variety of methods to choose which returns to audit, including:
Random Selection and Computer Screening
Some tax returns are chosen based purely on a statistical formula. The IRS compares your return to "norms" established for similar returns. These norms are developed from audits of a statistically valid random sample of returns conducted through the IRS’s National Research Program. This program helps the IRS refine and update its audit selection criteria.
Related Examinations
Your return may be selected for audit if it is connected to another taxpayer’s return that is already under review. This often occurs in cases involving business partners, investors, or other individuals with shared financial interests or transactions.
Note: filing an amended return does not affect the selection process of the original return. However, amended returns also go through a screening process and the amended return may be selected for audit. Additionally, a refund is not necessarily a trigger for an audit.
How does the IRS conduct the audit? And what Information should i provide?
The IRS conducts audits either by mail or through in-person interviews to examine your records. In-person interviews may take place at an IRS office (known as an office audit) or at your home, business, or your accountant’s or representative’s office (referred to as a field audit). Keep in mind, the IRS will always contact you initially by mail, and the letter will include all necessary contact details and instructions.
If your audit is conducted by mail, the IRS will request additional documentation related to specific items on your tax return, such as income, expenses, or itemized deductions. If you have too many documents to send by mail, you can request an in-person audit instead. Instructions for doing so will be included in the IRS letter.
Some additional tips:
The IRS may accept certain electronic records either in place of, or in addition to, traditional paper records. To find out which electronic formats are acceptable, contact your assigned auditor for specific guidance.
By law, you must keep all records used to prepare your tax return for at least three years from the date the return was filed.
The IRS will send you a written request outlining the specific documents and records that require review
Time to respond… a few common questions and answers
I responded to the audit, how do i know if irs received the response?
When responding to the IRS, always request confirmation of delivery, regardless of the service you use. For instance, if you choose the U.S. Postal Service, consider using one of their tracking or certified mail options to verify that your response was received.
If your audit letter includes the contact phone number 866-897-0177 or 866-897-0161, you can check the status of your audit by logging into your individual online IRS account. Under the "Records and Status" tab, you’ll be able to view details such as the audit start date, when letters were issued, and the due date for your next response.
What if i need additional time to respond?
For audits conducted by mail, fax your written extension request to the number provided on the IRS letter you received. If fax isn’t an option, mail your request to the address listed in the letter. Typically, the IRS grants a one-time automatic 30-day extension. If your request cannot be approved, you will be notified. However, if you received a "Notice of Deficiency" by certified mail, no extensions are allowed for submitting supporting documents. While you can continue to work with the IRS to resolve the issue, the 90-day deadline to petition the U.S. Tax Court cannot be extended.
For audits conducted through an in-person interview, contact the auditor assigned to your case to request an extension. If needed, you can also reach out to the auditor’s manager for assistance.
What if i dont respond by the deadline?
It’s very important that you respond by the date indicated on your letter or notice. If the IRS doesn’t hear from you by that date, it will complete the audit and send you a report detailing the proposed changes to your tax return.
What if i agree/disagree with the audit Determination?
If you agree…
If you agree with the audit findings, you’ll be asked to sign the examination report or a similar document, depending on the type of audit.
If you owe additional taxes, several payment options are available to address the balance due.
If you disagree…
If you disagree you have the option to request a conference with an IRS manager.
Additionally, the IRS offers mediation through Alternative Dispute Resolution (ADR), or you can file an appeal—provided there is enough time left under the statute of limitations.
