Just the word “audit” can strike fear in the hearts of business executives and individuals alike. Do not worry, you do not have to face it alone. The top-notch professionals at Whyte & Associates, Inc. offer many types of audit services in Rancho Cucamonga, CA. We can help you understand why you are being audited, what to expect, and how to prepare.
Types of tax audits
There are several types of tax audits, with differing processes.
In each case, the goal is to either verify that information on your tax returns
is accurate or adjust if inaccuracies are confirmed.
- Correspondence audit –
Also known as a mail audit, this is the simplest and least concerning
type. It does not involve a personal meeting with an IRS agent. A common scenario
would be a request for documentation to verify unusual deductions or
changes in income. This type of audit is often triggered by apparent
errors in tax filings. If you can provide the requested documents, and
they verify information on your return, no further action is likely. Otherwise,
adjustments will be made, which may mean that you owe the IRS.
- Office audit – This is a
bit more serious than a correspondence audit, and it involves meeting with
an IRS agent. The most common scenario is a request to review a business’s
books, which is not easily conducted via mail. Again, if your books are meticulously
kept and your tax returns have been accurate, there should be no problem.
However, it is imperative that your financial records be complete and
- Field audit – This audit takes
place at your business or home and is the most likely to have serious
consequences. It involves extensive review of tax returns, and verification
of information provided. Sometimes a field audit is ordered because it is
the only feasible means of verification, such as deductions related to a
home office or business equipment. In other cases, IRS may suspect fraud
or major errors. Because field audits are costly, IRS rarely conducts them
unless the potential discrepancy is a high dollar amount, meaning they can
result in a large change to your tax bill.
How we can help
No matter what type of tax audit you are faced with or what
triggered it, the key to a good outcome is preparation. You need to have
your books in order, be able to provide documents requested, explain discrepancies,
and comply with whatever verifications the auditor requests. If there was
misinformation on your return, you need a plan to pay any additional taxes
We will explain what to expect, help you prepare, and if necessary, represent you in personal interactions with the auditor. Do not delay – call us at (909) 575-0080 ASAP if you are being audited.
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