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What to Expect in Your IRS Audit

Common Law PC Dec. 4, 2023

Paying income taxes is an expected obligation for every individual living and working in the United States. However, some taxpayers fail to report certain income, underreport their taxes, report excessive expenses, or make math errors in their taxes. As a result, the IRS may conduct a tax audit to discover taxpayer errors, detect tax fraud, and ensure accurate reporting. If you receive a notice of an IRS audit, you might be unsure of your next steps. 
Reach out to an experienced Utah tax attorney as soon as you can. Here at Common Law PC, we’re ready to advise and guide clients through the complicated tax auditing process. Our skilled lawyer can educate you about what to expect during an IRS audit, enlighten you about your rights, and help you navigate key decisions. We’re proud to serve clients across Salt Lake City, Ogden, Park City, St. George, and Provo, Utah. 

What is an IRS Audit?

An IRS audit can be defined as a thorough evaluation of the tax information, accounts, and returns of an individual, business, or entity. The purpose of the IRS audit is to ensure that all incomes, expenses, deductions, and credits reported by a taxpayer are accurate, consistent, and in accordance with applicable tax laws. Generally, the IRS may choose a taxpayer for an audit randomly or based on suspicious activities. 

Reasons for an IRS Audit

Some of the most common reasons for a tax audit include: 

  • Failure to report certain income 

  • Reporting huge losses or excessive expenses. 

  • Self-employment 

  • Identify a math or data entry error during tax return calculations 

  • Understating reported sales 

  • Reporting several business-related expenses or deductions 

  • Claiming non-existent dependents 

  • Using round and neat figures when filing taxes 

  • Reporting false donations or claiming too many charitable donations. 

  • Home office deductions 

  • Claiming Earned Income Tax Credit (EITC) 

If you receive a notice of an IRS audit, you need to reach out to a seasoned tax audit attorney immediately. Your legal counsel can help you understand the types of IRS audits and what to expect, and walk you through the legal process. 

Types of IRS Audits

Here are the different forms of tax audits: 

Mail or Correspondence Audit 

A mail or correspondence audit may be done for minor issues, such as questionable deductions, missing paperwork, unreported income, and routine math errors. This is the least intrusive form of audit. 

Office Examination Audit 

An office examination audit is usually carried out in person by the IRS personnel (revenue agent or tax compliance officer). They will examine your filed returns to identify unreported incomes and ensure valid deductions. In most cases, visiting the IRS office may be required for the tax audit. 

Field Audit 

The field audit is an in-depth IRS audit that is often performed by the revenue agent. The tax compliance officer will schedule a date and time for an in-person interview. In a field audit, the officer will examine your records and accounts and ensure that your tax returns are accurate. In addition, the tax authorities may conduct a tour of your company. 

How Does the IRS Choose Who to Audit? 

As mentioned earlier, the IRS will choose the taxpayer—individual or business—to audit either randomly or based on suspected activities. 

How to Prepare for an Audit

It’s vital to be proactive in these situations. Here are some tips to help you prepare for an IRS audit and avoid potential issues: 

  • Gather and document your financial records. 

  • Organize your tax records for each year. 

  • Get a summary of all your financial transactions. 

  • Get copies of your income, expenses, and credits. 

  • Forward copies of all records, documentation, and correspondence to the mail address provided in the IRS audit notice. 

A detail-oriented Utah tax law attorney can help you understand what happens during the auditing process and properly document all of your tax information and financial records. 

What Happens During the Audit?

What happens during the tax audit will depend on the type of IRS audit being conducted. The tax auditing can done through mail or an in-person interview to examine your financial reports and accounts. Here’s what typically occurs during an IRS audit: 

  • The IRS will send you a notice of a tax audit. 

  • The IRS will schedule a date and time for the interview with the tax officials. 

  • You will reach out to the tax auditor for proper guidance on the next steps to take. 

  • You will gather and document all your financial reports, including income, credits, and receipts of expenses. 

  • You will hire a reliable lawyer to help you prepare for the audit and accompany you to the interview. 

  • The audit takes place. 

A dedicated lawyer can help you prepare extensively for the IRS audit and interview and guide you through the auditing process from start to finish. 

What Rights Do I Have During the Audit?

Here are some of your legal rights during the IRS audit: 

  • Right to Privacy and Confidentiality – The IRS must keep your information private and confidential, and avoid disclosing it to someone else without authorization. 

  • Right to Professional and Courteous Service – The IRS must treat you courteously, respectfully, and professionally. 

  • Right to Representation – You have the right to represent yourself or hire a trusted tax lawyer to represent you during the IRS audit. 

  • Right to Pay Only the Correct Amount of Tax Due – You only have to pay the actual amount of tax due under the law. You don’t need to pay anything more than that. 

  • Right to Appeals and Judicial Review – If you disagree with the collection process, the tax liability amount, or the decision of the tax auditing team, you can file a tax appeal within thirty (30) days of receiving the decision. 

Knowledgeable Legal Guidance

Having experienced guidance during a tax audit is imperative to protect your rights. At Common Law PC, we’re dedicated to providing reliable advocacy and skilled representation to clients in both state and federal tax law matters, including IRS audits. Our reliable attorney can represent your best interests during the IRS audit, handle all communications and negotiations with the tax authorities on your behalf, and help you achieve the most favorable outcome. 

Contact us at Common Law PC to schedule a simple case evaluation with a highly-skilled tax law attorney. We can help protect your rights, prepare you extensively, and represent you diligently at every phase of the tax auditing process. Our firm proudly serves clients across Salt Lake City, Ogden, Park City, St. George, and Provo, Utah.