The IRS said they are auditing me. What does this really mean?

On: September 23, 2023

In general, you only have about a one percent chance of actually being audited by the IRS. However, it is still a possibility that you may be chosen.

If you have received a letter that says you have been selected for an IRS tax audit, try not to panic. Reaching out quickly to an experienced tax accountant can ensure that you understand what is going on and that you have the right representation on your side.

What Is an IRS Tax Audit?

An IRS tax audit is an examination or review of an individual taxpayer or organization’s financial information and accounts to ensure that all information reported to the IRS is accurate and in line with the tax laws.

Being chosen for an audit does not mean that you have done anything wrong or that anything is even wrong with your tax return. In most cases, tax returns are chosen at random. With that said, if there is a problem with your tax return, you will be audited.

What Triggers an IRS Tax Audit?

While any tax return can be audited, there are some tax returns that are chosen more so than others due to what the IRS considers red flags. Some of these red flags include:

• Large business losses
• Large charitable donations
• Cryptocurrency
• High income
• Child tax credit payments
• High itemized deductions
• Self-employed income
• Home office deduction
• Large changes in income or expenses

This list is not exhaustive and there are other reasons why the IRS may choose to audit your tax return.

How is the Audit Conducted?

There are two ways that your IRS audit will take place and those include by mail or in person.

If you are being audited, whether by mail or in person, it is recommended that you quickly secure IRS audit representation in California immediately.

I am confused by this letter – What do I need to provide to the IRS?

IRS letters can be tricky and confusing, and you may feel lost and trapped as you try to navigate what is going on and what you need to turn in.

The IRS will require you to provide different types of documentation based on the reason why you are being audited, so there is no steadfast list of documentation you will need to supply.

Working closely with an experienced IRS tax professional can ensure that you know exactly what documents are required, how to get them, and submit them by the due date.

The audit is on a tax return from two years ago! Is this allowed?

Yes. The IRS is able to audit returns from up to three years ago. This means that you may be selected for an audit on a tax return from 2019, even though it is 2022. In some instances, the IRS can audit tax returns older than three years.

What are my options? I feel helpless right now!

Feeling helpless in a situation like this is quite common and most taxpayers share the same feelings with you. You do have several different options available to you when you are being audited by the IRS. You also have options once the IRS reaches an outcome.

It can be difficult to understand all of your options, how they relate to your tax situation, and how they will affect you, so it is important to work with an IRS tax expert to review your information and guide you during the audit.

Don’t Let an Audit Scare You and Hire the Right Tax Representation Today 

A tax audit can be scary, but it does not always have to be. Understanding your rights and knowing what is going on during the situation is key. It is recommended that taxpayers hire an experienced professional who offers tax audit representation as the IRS is not going to hold your hand through the examination.

At Leading Tax Group, our team of IRS tax experts is made up of an experienced tax accountant, retired IRS auditor, and former IRS tax attorney. We know and understand exactly what the IRS wants and what they are looking for. Our aggressive representation will support you and help you get the outcome you desire.

Don’t let this tax audit worry you and turn to our team for guidance and assistance. Call Leading Tax Group today to schedule a consultation.