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What you need to know about an IRS field audit

On Behalf of | Nov 22, 2022 | Tax Audits

The IRS conducts tax audits in California and all around the United States. On average, the IRS audits four out of every 1000 taxpayers. If you’re chosen for an audit, you might get an IRS field audit. Here are a few things to keep in mind.

The basics of an IRS field audit

A field audit is a tax audit that can occur in several different locations. The IRS might conduct the audit in your home or place of business. If you have an accountant, the audit might take place in the accountant’s office.

The IRS will examine your financial records to make sure your tax return is correct. The IRS will examine business financial records if your business is under audit. Otherwise, the IRS will examine your individual financial records.

A field audit is commonly used in complicated cases. In simple cases, the IRS usually allows a correspondence audit by mail or phone. But if the IRS requests a field audit, that means the issue is more complex.

A field audit is more intrusive than a correspondence audit. The IRS agent conducting the audit will need more information and ask more questions. If a business is audited, the IRS agent might interview employees about accounting procedures and internal operations.

Reasons for being chosen for an IRS audit

Getting selected for IRS tax audits doesn’t necessarily mean you’ve done anything wrong. The IRS usually randomly chooses taxpayers to audit.

The IRS applies statistical formulas to tax returns. Any tax return that stands out from the crowd might trigger an audit. The IRS can also audit a taxpayer for reasons other than the state of their tax return. A taxpayer might get selected for an audit if they’re connected to a person or business with an erroneous tax return.

The importance of organization

No one wants to face an audit. But you might want to keep organized financial records in case you receive an audit notice from the IRS.