There are not many things in this world more likely to induce a feeling of dread or anxiety than when you open a letter from the Internal Revenue Service (IRS) indicating that you have been selected to be audited. An audit by the IRS that results in a penalty can have a long-lasting negative financial impact on individuals and businesses alike. Because of this, an audit notice should be taken very seriously. Mr. Steve Whyte of Whyte & Associates offers professional audit services for those in need in the Fontana, CA area.
Audits can have varying repercussions based on the type of audit being faced. As such, it’s important to understand the types of audits that the IRS can conduct on you or your business.
This is the most common form of audit conducted by the IRS, comprising around 75 percent of all audits. A correspondence audit is also considered the simplest audit. If you’ve been selected for a correspondence audit, you’ll receive a letter from the IRS (most often a 566 letter) that requests additional information regarding portions of your tax return. It’s important to understand that when you receive a letter from the IRS, you should address it immediately, as it could greatly complicate what is otherwise a simple correspondence issue if you delay or ignore it.
When the IRS has a question about your tax return that is more complex, they may request for you to visit an IRS office for an office audit. Generally, if you’ve been selected for an office audit, it is due to having issues that are too detailed or numerous to handle via correspondence. Issues that may require an office audit include:
Considered to be the most comprehensive and detailed form of audit, a field audit occurs when the IRS visits you at your home or business to physically examine records. A field audit is conducted by an official IRS revenue agent due to the skill and knowledge necessary to perform it. The IRS agent assigned to your field audit could also be a specialist in your field or industry.