There are some people you’d rather never hear from if you can help it: The Internal Revenue Service (IRS) is one of them. However, you may end up being one of the “lucky” taxpayers who are chosen to undergo the IRS audit process. The question you may be asking yourself in this situation is “How exactly will the IRS audit me?” According to the experts at TaxAudit, which has earned a number of glowing audit defense reviews, the IRS might choose to audit you in a couple of key ways.
First, the IRS may send you what’s called a CP2000 notice. This notice matches up the documents that third parties have sent to the government about income you’ve received – such as 1099s and W-2s – with the income-related information you’ve reported on your tax return. Let’s say you missed an individual retirement account distribution; in this case, the notice you receive from the IRS will show the income-related information you reported, the information that your employer, banks, and financial institutions reported, and the amount by which these two totals differ. Then, you’ll see how much extra tax you may be required to pay. If you believe that the CP2000 notice is erroneous, you can dispute the taxes being proposed within the next 30 days.
The IRS might also decide to complete a field examination audit. Revenue agents typically use this audit method for business entities or for individuals with high incomes or complicated incomes, according to current tax audit reviews. You can expect your audit to take place at your business location or at your residence. This might seem intrusive, but fortunately, it can also save you on the time and hassle associated with reporting to an IRS office.
Facing a tax audit can no doubt be stressful. However, staying organized and consulting an audit defense firm to find out what your rights are during a tax audit may help you to more confidently complete the process.