Question

Provide the IRS audit process

Answer 1

1. The audit letter- In this, one gets a letter from the IRS asking for certain documents to support the deduction or other position taken on your return. If you don't have any proof then you may have to pay up in order to close the matter. But you can also argue with them through a proper channel.

2. Office audit - In an office audit, the IRS asks for in person interview regarding the specific items on your return. This is a full fledged audit in which you're asked to visit the IRS office on a particular date where you've to show all the documentation and you may or may not have to pay the fine depending upon your documentation.

3. Field Audit - In a field audit, the IRS officer comes to your home or your office or to your accountant's office to do general examination of your records.

4. Line by line audits - this are the most dreaded audits among all. Tax payers are randomly chosen to have every line on their return examined. These audits occur rarely under the NRP. They are conducted to give the IRS data used to conduct the future targeted auditsaudits but taxpayers who go through them may owe additional taxes and interests and panalties.