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The Types of IRS Audits and What They Mean

Being audited by the IRS can be terrifying, no matter what sort of audit is on the table. Audits are never fun and, in some cases, can lead to a huge tax bill. However, it’s essential to try to relax and avoid getting anxious over the situation. What you may not know is that there are several different types of audits. Some are serious and others are more minor. All of them are based on specific rules. When you understand what to expect and follow best practices, the audit may not be as bad as you think.

Correspondence Audits

Correspondence audits, also known as mail audits or campus examinations, are the simplest type of audit. A correspondence audit has less focus on technical tax issues. As the name might cause you to expect, the entire process occurs through the mail. The IRS notes that the purpose of a correspondence audit is to quickly handle tax problems using the mail. Sometimes the telephone will also be used. This is a less invasive audit by an agent who is processing many other cases simultaneously. In countless cases, the examiner on the file hasn’t even reviewed it before the taxpayer gets back in contact with them. Instead, the file is typically reviewed on the day of the interview.

Office Audits

Unlike the correspondence audit, an office audit is in-person, typically in the office of an IRS agent. This audit is often used for somewhat complicated issues, such as challenging non-business returns or small business returns. However, the audit may sometimes be conducted through correspondence. In addition to asking for validation of your credits and deductions, the IRS will also look closely at your income, business activity, and lifestyle to determine how accurate your tax return is. This will likely be done where you conduct business or live. In cases where the return needs to be transferred after the examination process starts, the taxpayer’s convenience is taken into consideration. Cases may be transferred to an area office or even several of them. When this occurs, audit reconsideration is provided.

Field Audits

A field audit or field examination is used for the most complicated issues. The way the audit takes place will depend on the problems and how difficult they are. A field audit is an in-person audit that will take place at a local IRS office, the organization’s location, or the organization’s representative office. Two types of field audits are possible: a Team Examination Program or a general program. The first is an exam that involves several examiners and is most common with complex, large organizations. The second is a field exam at the organization’s location conducted by a revenue agent. Revenue agents will audit and examine the financial records of corporations, businesses, and individuals to ensure tax liabilities are met. This includes reviewing the taxpayer’s records and books at a warehousing location or place of business. They will also go over the person or company’s return and any supporting documentation. An engineer agent may also be present to provide unique expertise about any issues encountered in tax returns. In addition, these agents help support IRS organizations that provide an examination of returns.

Reach Out for Help With Your IRS Audit

If you are dealing with an IRS audit, a tax attorney can help. However, the experts at Guardian Tax Law can help you through the process. We will offer a free consultation to help you get started on the right foot. We’ll walk you through the audit process and make sure all steps are handled the exact way they should be.