The thought of being audited by the IRS is something that strikes fear into the hearts of many individuals and small businesses, although most larger businesses are well equipped to deal with IRS audits due to the resources they have on hand. It is worth bearing in mind that only a tiny percentage of individuals are audited by the IRS, which tends to focus more on large organizations and very wealthy individuals.
How Does the IRS Audit Happen?
In many cases, auditing by the IRS takes place via post and in some cases it is just a case of being asked for additional documentation or supporting information to back up tax returns. This is requested via letter by the IRS and could result in a tax adjustment being made in relation to the amount that you owe.
Another type of audit that may be carried out by the IRS is an interview audit or examination. This is where you may be asked to attend the offices of the IRS and take along supporting evidence and paperwork that officers have asked for in support of your tax returns.
Another type of audit that may be undertaken is the field audit, which is where the IRS officers come to your home or business. This is sometimes used for small businesses or where the business is operated from home and would involve IRS officers sitting with you and going through paperwork such as invoices, receipts and any other documentation they require.