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What to Expect in an IRS Audit

The IRS conducts audits in two ways:

Correspondence audits: In a correspondence audit, the IRS will send you a letter notifying you that it is reviewing your tax return. The letter will request that you provide documentation to support the information on your return. You will have a limited time to respond to the letter, and you will need to provide the requested documentation.

In a correspondence audit, the IRS will send you a letter notifying you that it is reviewing your tax return. The letter will request that you provide documentation to support the information on your return. You will have a limited time to respond to the letter, and you will need to provide the requested documentation. Field audits: In a field audit, an IRS agent will visit you at your home or place of business to review your tax return. The agent will ask you questions about your return and request documentation to support the information on your return.

In either type of audit, you will need to provide documentation to support the information on your return. The documentation you will need to provide will depend on the information being reviewed. For example, if you are being audited for business expenses, you will need to provide receipts, invoices, and other documentation to support the expenses.

You will also need to provide documentation to support your income. For example, if you are being audited for wages, you will need to provide W-2 forms and other documentation to support the wages you reported. If you are being audited for interest or dividends, you will need to provide 1099 forms and other documentation to support the interest or dividends you reported.

You will need to provide any other documentation that is relevant to the information being reviewed. For example, if you are being audited for charitable contributions, you will need to provide documentation to support the contributions you made.

You will need to provide the documentation to the IRS agent conducting the audit. The agent will review the documentation and determine whether the information on your return is accurate. If the agent determines that the information on your return is accurate, the audit will be closed. If the agent determines that the information on your return is inaccurate, the agent will make adjustments to your return.

The adjustments will result in additional tax liability, penalties, and interest. The agent will send you a notice of the proposed adjustments. You will have a limited time to respond to the notice. If you agree with the proposed adjustments, you will need to pay the additional tax, penalties, and interest. If you do not agree with the proposed adjustments, you will need to file an appeal.

The IRS Audit Process

The IRS audit process is governed by the Internal Revenue Code and the Internal Revenue Manual. The IRS has a burden of proof in an audit. The IRS must prove that the information on your return is inaccurate. The IRS cannot simply assume that the information on your return is inaccurate.

The IRS will send you a notice of the proposed adjustments. The notice will explain the proposed adjustments and the basis for the adjustments. The notice will also explain your appeal rights. You will have a limited time to respond to the notice.

If you agree with the proposed adjustments, you will need to pay the additional tax, penalties, and interest. If you do not agree with the proposed adjustments, you will need to file an appeal.

If you file an appeal, the IRS will review your appeal and determine whether the proposed adjustments are accurate. If the IRS determines that the proposed adjustments are accurate, the IRS will send you a notice of the final determination. The notice will explain the final determination and the basis for the determination. The notice will also explain your appeal rights.

If you do not agree with the final determination, you will need to file an appeal with the United States Tax Court. The Tax Court is a federal court that has exclusive jurisdiction over tax disputes. The Tax Court is not part of the IRS. The Tax Court is a court of law, and the IRS is a party to the case.

The Tax Court will review your appeal and determine whether the final determination is accurate. If the Tax Court determines that the final determination is accurate, the Tax Court will enter a judgment against you. If the Tax Court determines that the final determination is inaccurate, the Tax Court will enter a judgment in your favor.

The IRS can also audit your state tax returns. However, the process is different than for federal returns. The IRS cannot order the payment of state taxes, interest, or penalties. Instead, it can recommend that the state pursue collection action against you.

The IRS conducts audits for a variety of reasons. Some audits are random, while others are triggered by discrepancies between the information on your tax return and information received from third parties, such as your employer or your bank.

If you are selected for an audit, the IRS will notify you by mail. The notice will explain the reason for the audit and will list the documents and information that you need to provide.

You can be audited for any tax year. However, the IRS generally has three years from the date you file your return to audit it. This is known as the statute of limitations. The statute of limitations is extended to six years if the IRS believes that you have underreported your income by more than 25%.

If you do not file a return, the statute of limitations does not apply. This means that the IRS can audit you at any time.

If you are audited, you should consult with a tax attorney. An attorney can help you understand the audit process and can represent you during the audit.

Defending Against an IRS Audit

The first step in defending against an IRS audit is to understand why you are being audited. If you are being audited because of a targeted audit, you may be able to avoid an unfavorable determination by providing additional information to the IRS. If you are being audited because of a random audit, you may be able to avoid an unfavorable determination by demonstrating that your tax returns were filed in good faith. The key to defending against an IRS audit is to work with an experienced tax attorney who can help you understand your rights and obligations, and who can help you defend your interests.

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