What types of audits does the IRS perform?

| Mar 30, 2021 | Tax Law |

Bring up the word audit, and many Texas residents’ minds jump to picturing an IRS agent at their front door. This isn’t always the case. Rather, there are various types of audits that the IRS can perform, and understanding what these are can help to put your mind at ease about any potential notices.

Correspondence audits

Tax law defines correspondence audits as those handled through written mail. You’ll receive a letter from the IRS asking for specific documentation regarding your tax returns. For example, let’s say that you claimed a charitable deduction on your tax return. The IRS may request that you send it a copy of the written acknowledgment letter from the charity that you donated to.

Office audits

In the event that the IRS wants to sit down with you and personally ask questions regarding your submitted tax returns, they’ll request an office audit. In this letter, they’ll designate an IRS office that you’ll need to visit at a specific appointment date. You can bring your own attorney, CPA or other tax professional as your representative.

Field audits

Field audits occur when an IRS agent comes to your office or home. They will ask for various documentation during their visit. It’s advisable to have your tax law attorney present during a field audit. It’s vital to note that this type of audit of an individual is very rare.

Line-By-Line audit

Audits where IRS officials go over every single line of tax returns are called line-by-line audits. These are performed every few years under the National Research Program. They help to give the IRS necessary information about better targeting audits in the future.

Being told that you’ll need to undergo an IRS audit can be scary, to say the least. In reality, the situation doesn’t have to be scary when you know what you’re doing. By understanding the different types of audits that we addressed above, you’ll be better prepared to deal with the road ahead.