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The IRS Examination Process (Audits by Mail)

While most tax returns are accepted as filed, some tax returns are selected for audit to determine if income, expenses, and/or credits are being reported accurately.  This selection may be triggered by specific items on the tax return filed that are controversial or disproportionate to other items on the tax return, such as a deduction being excessive compared to the average of such deductions for all taxpayers filing tax returns within an income range applicable to the taxpayer.  It may also be triggered due to prior IRS experience with either the taxpayer subject to the audit, another taxpayer providing a specific source of income or deduction to the taxpayer as a pass-through item when the taxpayer is one of the partners or shareholders of the other taxpayer, another taxpayer who may be a vendor or creditor of the taxpayer, or even the tax return preparer.  In addition, the IRS chooses a small percentage of tax returns to audit purely at random.

When selected for audit, the taxpayer should be aware of the audit process, as well as taxpayer responsibilities and the rights and options available to the taxpayer during and after the audit.  The IRS provides Publication 3498-A describing this information.

DISCLAIMER: This information is extracted with permission from IRS releases.  We are not responsible for the application of this general information to the specific circumstances of a reader unless we have been engaged as the reader’s accounting firm.

ASSISTANCE:  If you need help in responding to an IRS examination notice,  Roy & Associates, PC may be able to be of assistance.  Our firm and its predecessor firms have been providing tax services to individuals, small businesses and nonprofit organizations in southwestern Pennsylvania since 1942.  If the IRS wishes to examine your tax return and you are unsure of how to proceed or wish counsel on how to respond, you may make  an appointment with one of our Directors of Audit and Tax Services, all of whom are well-versed in personal income taxation.  See the CONTACTS page above.  Standard rates and terms for service will apply.

 

 

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