All You Need to Know About IRS Audits

IRS Tax Audit

Being the subject of an IRS audit is one of the worst experiences you can have as a taxpayer. If a taxpayer faces an IRS tax investigation, the Internal Review System (IRS) will examine their financial info and accounts to check for discrepancies and inaccuracies. There is no hard and fast criteria when it comes to selecting taxpayers for an audit. In fact, the entire procedure represents a random selection process, in which the agency’s computer system is employed to flag returns that deviate from the norm. One way to properly defend yourself during an audit and safeguard your interests is to seek the help of an experienced Dallas tax attorney. In this blog, we are going to discuss all you need to know about IRS Audits.

Different types of Tax Audits

There are 3 types of IRS audits:

  • Mail audit: Requires taxpayers to provide relevant documentation through mail to back the claims on their return. During such an audit, submitting appropriate proof is most likely to satisfy the IRS and bring the tax investigation to an end.
  • Office audit: When called for an office audit, the taxpayer needs to visit a designated local IRS office. Depending on the severity of the issue, they may be asked to answer a few questions raised by a field agent and provide additional documentation. During such audits, taxpayers have the right to bring a tax resolution attorney along with them.
  • Field audit: The IRS conducts a field audit at the taxpayer’s residence or place of business. During such an audit, all items on the return may be thoroughly looked at. Covid has decreased the amount of field audits but now that IRS agents are going back to the office, we should see a rise in these cases.

Related Blog Post: Debunking 5 Myths Related to IRS Tax Audits

Documents you must keep handy during an IRS Audit

Here is a list of documents that you may need to show the IRS panel during an IRS tax investigation:

  • Bills
  • Receipts
  • Loan agreements
  • Canceled checks
  • Employment documents
  • Medical and dental records
  • Insurance documents

Your rights during an Audit

Before you attend an IRS audit, you must be aware of your legal rights. Some of the rights you are entitled to during an IRS audit include:

  • Right to quality service
  • Right to be informed
  • Right to pay no more than the correct amount of tax
  • Right to challenge the IRS’s position and be heard
  • Right to appeal an IRS decision in an independent forum
  • Right to finality
  • Right to confidentiality
  • Right to privacy
  • Right to retain representation
  • Right to a fair and just tax system

Related Blog Post: A Look at the Initiation of IRS Tax Investigations

What to expect from IRS Audits?

In most scenarios, the IRS generally audits returns that a taxpayer filed during the last three years. However, in cases where major errors are discovered, the IRS may add more years to the audit inquiry. The overall duration of an audit mainly depends on the severity of the case, cooperation of the subject of IRS tax investigation, and whether or not you agree with the tax agency’s findings. If the IRS determines that your returns are inappropriate, it may impose penalties, in which case, you might have to pursue legal action. It is advisable to hire one of the leading Dallas tax attorneys for the best IRS tax problems resolution.

Final word

If the IRS is satisfied with your return and related documents, you can expect to walk away from the audit without any issues. However, as mentioned earlier, if the agency finds any discrepancies, you may face severe penalties. Filing an appeal against an IRS penalty can be a tricky affair in the absence of formal knowledge of the Tax Code. That is why you should hire an experienced Dallas IRS lawyer. When looking for tax attorneys in Dallas, TX, look no further than the Law Offices of Nick Nemeth. We offer some of the best IRS tax help to the Dallas community. Contact us today for a no-obligation consultation at (972) 426-2553 or fill out our contact form.

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