Tax audits are usually triggered by unusual or unordinary deductions or forms of income listed on a tax return, but taxpayers can also be selected at random.
If the IRS determines that a taxpayer is subject to an audit, they will be notified only via U.S. mail.
A tax return is subject to an audit any time within six years of filing, though generally the IRS only includes returns filed within the last three years.
There are three types of tax audit that are conducted:
Mail audits are additional documentation requests from the IRS that a taxpayer will receive and respond to via mail.
Office audits are in-depth, in-person interviews conducted by audit officers at a local IRS office.
Field audits are very in-depth, in-person interviews conducted by IRS agents at your home or business.
A tax audit’s length will vary greatly depending on the type of audit that is conducted, how complex it is, and the taxpayer’s willingness to cooperate with any IRS findings.
There are three ways that an audit is concluded:
The result of the audit determines that changes need to be made, and the taxpayer agrees to make proposed amendments.
The result of the audit determines that changes need to be made, and the taxpayer does not agree to make proposed amendments. As a result, the taxpayer can either file an appeal or meet with an IRS manager for a dispute mediation.
3. No change
All information on the tax return is reviewed and confirmed, and no changes are needed.