What Happens If You Get Audited by the IRS?
Receiving a letter from the IRS can be stressful, especially if it mentions an audit.
However, an audit does not automatically mean you did something wrong. In many cases, the IRS is simply requesting additional information to verify items reported on a tax return.
Understanding what to expect can help reduce anxiety and improve your ability to respond effectively.
What Is an IRS Audit?
An IRS audit is a review of information reported on a tax return. The purpose of the audit is to determine whether income, deductions, credits, and other tax items were reported accurately. Some audits are relatively simple and involve only a few questions, while others may require more extensive documentation.
What Triggers an IRS Audit?
There is no single reason a return may be selected for examination. Common factors can include:
Significant changes in income
Large deductions relative to income
Unreported income
Excessive business losses
Errors or inconsistencies
Certain refundable credits
In many situations, returns are selected through automated screening processes rather than because the IRS suspects wrongdoing.
Types of IRS Audits
Correspondence Audit
This is the most common type of audit. The IRS requests documentation by mail regarding specific items reported on the return.
Office Audit
The taxpayer meets with an IRS representative and provides supporting documentation for review.
Field Audit
A field audit is generally more comprehensive and may involve the IRS conducting a review at a business location or taxpayer's home.
What Should You Do If You Receive an Audit Notice?
The most important step is to avoid ignoring the notice. Read the letter carefully and determine:
What tax year is involved
What information is being requested
The response deadline
Whether additional documentation is needed
Keeping organized financial records through proper Bookkeeping & Accounting practices can make responding to an audit significantly easier.
Gather Supporting Documentation
The IRS may request documentation such as:
Receipts
Bank statements
Mileage logs
Invoices
Payroll records
Brokerage statements
Maintaining complete records helps support the positions taken on your tax return.
Should You Handle an Audit Yourself?
That depends on the complexity of the issue. Simple correspondence audits may be manageable for some taxpayers. More complex audits often benefit from professional representation. An experienced advisor can help:
Communicate with the IRS
Organize documentation
Respond to requests
Protect taxpayer rights
Reduce unnecessary stress
Many taxpayers who receive audit notices also benefit from reviewing their overall Tax Strategy & Planning process to identify areas for improvement going forward.
How Groundwork Tax & Accounting Can Help
At Groundwork Tax & Accounting, we assist individuals and business owners facing IRS inquiries, audits, and other tax issues. Whether you need help responding to a notice, gathering documentation, or obtaining professional representation, our goal is to help you navigate the process with confidence.
We also provide Individual Tax Preparation and Business Tax Preparation services designed to help clients maintain accurate filings and reduce future issues.
Related Services
Frequently Asked Questions
How likely am I to be audited?
Most taxpayers are never audited, although audit rates vary based on income levels, business activity, and other factors.
Does an audit mean I did something wrong?
No. Many audits are routine requests for additional information and do not indicate fraud or intentional wrongdoing.
Should I ignore an IRS audit notice?
No. Failing to respond can lead to additional assessments, penalties, or collection actions.
What records should I keep in case of an audit?
Keep tax returns, receipts, bank statements, invoices, mileage logs, and other supporting documentation related to items reported on your return.
Can a tax professional represent me during an audit?
Yes. Depending on the circumstances, qualified tax professionals may communicate with the IRS and assist throughout the audit process.
