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Navigating IRS Tax Audits: What You Need to Know

Posted by Kamyar Mehdiyoun, Esq. | Oct 07, 2023

Learning that you have been selected by the IRS or by a state taxing authority for a tax audit can be understandably stressful. During a tax audit, a well-trained government employee will probe your financial affairs by examining your tax returns and other financial documents for any evidence of tax evasion. Small businesses and self-employed individuals are targeted for tax audits more frequently than other taxpayers. Once selected for an audit, the likelihood that you will be found to owe taxes at the end of the audit process is very high. An auditor may also find that you are guilty of tax fraud, which in addition to civil fines may subject you to criminal penalties. Therefore, it is critical that you be well-prepared to handle the examination process.

In order to conduct a tax audit, a government agent may visit you at home or at your business. You may also be asked to appear at a local IRS or state government office. In a correspondence audit, you will be contacted through the mail and will be asked to send supporting information or documents to the IRS or to the state taxing agency.

Skillful representation is crucial for achieving favorable results after a tax audit. If you have been selected for a state or IRS audit, click here to learn how we can help you during the examination process.

What is an IRS Tax Audit?

An IRS tax audit is a formal examination conducted by a representative of the federal government. The primary objective is to scrutinize the financial and tax records of an individual taxpayer or a business entity. This is done to verify the accuracy of the tax return filed and ensure compliance with tax laws.

The audit process may involve a thorough review of income statements, expenditure receipts, bank statements, and other financial documents. If the auditor discovers discrepancies or a tax deficiency, new taxes may be assessed, along with applicable interest and penalties.

It's crucial to understand that an IRS tax audit is not an accusation of wrongdoing but rather a procedure to confirm the accuracy of a tax return. However, if the findings are unfavorable, taxpayers have the right to appeal and should consider seeking specialized IRS audit representation help to navigate the complexities of tax law.

Understanding the IRS Tax Audit Process

An IRS tax audit is a thorough examination of your tax return to ensure that all reported information is accurate and complies with the tax laws. While the prospect of an audit may seem daunting, it's crucial to remember that being selected for an audit doesn't necessarily imply wrongdoing. The IRS employs various methods, including random selection and targeted audits, to choose tax returns for examination.

During an audit, the IRS may request additional documentation, such as receipts, bank statements, or invoices, to substantiate the items reported on your tax return. They will carefully review the information provided, comparing it with the records they possess. The audit process may involve correspondence, an office audit at a local IRS office, or even an in-depth field audit conducted at your place of business.

While rare, in certain cases, tax evasion or fraudulent activities can lead to criminal charges. Tax evasion is a serious offense that can result in fines and even imprisonment. It is essential to understand that intentionally providing false information on your tax return or engaging in fraudulent activities can have severe legal consequences.

If you are facing an IRS tax audit, it is crucial to address the issue promptly and take the necessary steps to resolve it. Working with an experienced IRS tax audit lawyer can make a significant difference. 

If you or your business has been selected for a tax audit, contact Kamyar Mehdiyoun, Esq. for a free initial consultation. 

About the Author

Kamyar Mehdiyoun, Esq.

Kamyar Mehdiyoun, holds a Master of Law (LL.M.) degree in taxation from Georgetown University Law Center and focuses his practice on tax law. In 2003, he received the Award for Excellence in Tax Practice and Procedure from Georgetown. He also holds a Certificate in Employee Be...

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