An IRS audit notice can put fear and doubt in the mind of even the most confident person. It is the financial and legal equivalent of being followed by the police block after block.

Eventually, you start asking yourself questions:

Have I done something wrong?
Am I in trouble?
Could the IRS be mistaken?
How can I protect myself?
Should I hire a tax lawyer for my IRS issue?

Make no mistake — if you are being audited by the IRS, you do face the possibility of significant tax penalties and even criminal charges if things don’t go your way.

And paperwork. Mountains of paperwork.

As part of your audit, the IRS will jam you with paperwork requests, demanding an incredible amount of documentation within a tight 30-day deadline.

For the average person — even an accountant for that matter — IRS audits are fraught with pitfalls.

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What's the Audit Process of The IRS?

An Internal Revenue Service (IRS) audit often occurs when the IRS needs to confirm some details on a tax return form and determine its accuracy. Approximately one in 75 individuals get audited by the IRS.

This implies that about 80 percent of all taxpayers will get audited at some point during their working lifetime. However, it is not always random. Those who get selected are often people who have a much higher likelihood of making an error or fraudulent claims on the tax return.

The IRS is one of the most powerful organizations and known to “win” a majority of their audits. This is because most individuals are unsure of all tax laws or what they need to deliver to the auditor, resulting in many tax filers owing the IRS money.

Due to these factors, IRS audits can be stressful and frightening. Rather than getting frustrated and anxious about an upcoming IRS audit, it is best to acquire an IRS audit defense. A strong audit defense includes the services of a professional tax attorney, who can assist in looking for all the possibilities that will ensure a positive financial outcome at the conclusion of the audit.

The Stages of an IRS Audit

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According to the 2017 Data Book released by the Internal Revenue Service (IRS), only 1 out of every 160 people were audited in 2016. However, the National Tax Payer Advocate begs to differ and says your chances are really 1 in 16.

It really doesn’t matter which group is right if you’re going through the IRS audit process. It’s lengthy, scary, and can end up costing you a lot of money if they find any mistakes or problems.

But what does the IRS audit process really involve? And how can you avoid one of the many IRS audit triggers?

If you want to know what really happens when you’re getting audited, keep reading. We’re sharing everything you need to know about the tax return audit process.

IRS Audit Process Through the Mail

The IRS will never call you directly to let you know you’re being audited. Instead, you’ll find out through the mail. These are known as correspondence audits.

This type of audit happens when the IRS has additional questions or requires more documentation to back up your return. Most times, all you need to do is submit the additional paperwork. You won’t even have to speak to a live person.

In-Office Audits

In cases where the IRS requires more information, they may require you to attend an in-person audit at a local IRS office. You just need to bring along the documentation they ask for.

And it’s your right to bring along your accountant or an attorney to represent you.

Field Audits

It’s more serious when the IRS requests to see you at your home or place of business. At that point, they want to conduct a more in-depth investigation. These only happen when the IRS spots major red flags or there are too many questions for them to ask in any other capacity.

How Long Audits Typically Take

Thankfully, the IRS only has three years to charge you additional taxes on an audited return. The statute of limitations expires three years from the date you filed it or the due date of the return, whichever is later.

While the IRS has three years to audit your return, most of the time the audit only takes a year. There’s even a training guide the IRS must adhere to stating they have 26 months after the due date of the return or the date it was filed, whichever is later.

However, if tax fraud is involved, there is NO statute of limitations. For large amounts of unreported income, the statute is six years. Most of the time the IRS only goes into an audit with the assumption that three years is the limit.

Types of Audits & Time Frames

Mail audits typically come within seven months of your filing and may take between three to six months to complete.

Office audits typically start within a year of your filing. As with mail audits, they tend to wrap up within three to six months. There are only delays if the auditor finds additional issues or you fail to provide them with complete information.

Field audits typically begin within a year after you file your return. They take about a year to complete because the IRS does an extensive review of your records and finances. They also often involved multiple tax years.

How the IRS Selects Returns for Auditing

There are several IRS audit triggers that every person should be aware of. Obviously, not filing fraudulent returns is a big step towards never being audited.

Each year the IRS selects tax returns for an audit. This is only done to verify the information is accurate and does not necessarily mean there’s an issue.

However, there are factors the IRS uses to select tax returns for an audit.

Computer Scoring

The IRS has two computers systems they use to analyze your return for potential errors. They also use it to calculate numeric scores.

They use the Discriminant Function System (DIF) score as an indicator of potential changes. The Unreported Income DIF (UIDIF) score acts as an indicator of unreported income.

Those returns with high scores are selected for a tax audit.

Information Matching

The IRS matches the income you claim against the payer reports. If they don’t match, there’s a red flag and you’re likely to be audited.

Abusive Tax Avoidance

The IRS selects tax returns to identify promoters and participants of abusive tax avoidance transactions.

Audits of Large Corporations

Large corporations have more complex tax returns where it’s easy to make mistakes or purposely hide abusive tactics. Therefore, they’re more likely to be audited.

Audits of Small Businesses

Those who own small businesses should assume their audit will also take longer. That’s because it’s harder for the IRS to track their income since it’s not reported on information statements.

And if you’re a cash business, your audit could take longer.

Related Examinations

If your business partner or an investor is audited and it doesn’t turn out well, there’s a good chance you’ll end up being audited as well.

Other Audit Factors

There are other factors that can affect the outcome and length of your audit. If your auditor is making a lot of adjustments, it takes longer as they’ll most likely want to look at other tax years as well.

What Happens When the IRS Finds Problems?

If the IRS finds problems, you’ll end up with penalties, which makes the process take even longer. If the IRS finds out you committed fraud, it can take years while they pursue criminal prosecution against you.

Lastly, it’s your right to disagree with your audit. If you do, you’ll have to take it to IRS appeals and possibly court. That could take six months to a year to finalize.

Audit Defense & Representation

From the moment you receive correspondence from the IRS, the audit defense team will be with you every step of the way until your situation is resolved. They will ensure to adequately represent you and guarantee that the IRS authority does not take complete control of the audit process.

Even if the audit was triggered by a minor error or excessive deductions, a tax attorney can view the case from multiple angles and find loopholes to legally protect your interests. IRS audit defense will eliminate the worry over an IRS audit of your business or personal taxes.

Work with Experienced IRS Defense Attorneys

Lastly, it’s your right to disagree with your audit. If you do, you’ll have to take it to IRS appeals and possibly court. That could take six months to a year to finalize.

Tax lawyers will draft all responses to IRS notices, deal with all the paperwork, attend every meeting and even help you present your case legally to the auditor. They can handle any challenging situations and fully comprehend the audit process as well as all tax-related jargon to deal with the auditor more effectively and ensure smooth communication between both parties. Good communication also helps the tax audit process to become quick and painless.

Minimize the Financial Impact of an Audit

If you want to save your business and yourself from IRS penalties, interest fees and possible criminal charges such as jail time, you need a tax audit defense. The IRS has many resources readily available to pursue the tax audit. They can look deep into your financial history, dating back to many years before the current audit.

Once you have a reliable and experienced IRS defense, you may result in paying the lowest possible taxes and charges allowed by the taxation law or have your audits dismissed after the tax audit defense argues your appeal.

Red Flags that Capture the Attention of an IRS Audit

In 2017, the Internal Revenue Service (IRS) audited only 1 in 160 individual returns. The number of people audited every year has been on a …

June 4, 2019

Attorney-Client Privilege

Representation by a tax attorney provides significant advantages of the attorney-client privilege. A tax attorney cannot testify against his client with any information regarding taxes and finances that have been disclosed to him. Generally, this means that statements you make to your tax lawyer cannot be disclosed to the IRS or anyone else. A good IRS defense team will advise you on these privilege issues and even conduct privilege reviews.

We Will Deal with the IRS for You

At Silver Tax Group, our lawyers can help level the playing field and position you to succeed or, at the very least, minimize the damage from your IRS audit. For starters, we are often able to get the audit changed to a correspondence audit, saving you time and effort, as well as negotiate a longer term for gathering the paperwork.

One of the most intimidating parts of an audit is the interaction with the IRS agent. We can act as intermediary for you, taking care of the audit process while you focus on moving on with your life. We will put together all of your documentation and go line-by-line with the IRS auditor to make sure everything is handled properly.

Already Been Audited?

Find a Solution with Silver Tax Group.

The IRS audit process can get complicated. Especially if it’s an office or field audit.

You don’t want it to last any longer than it has to. That’s why it’s so important to have a tax professional helping to guide you through the process.

We can help. You can rely on our tax attorneys to obtain the best possible outcome regardless of your individual circumstances. We’re here for you. Our mission is to make sure that you get taken care of in the best way you can be. Contact us today for a free case evaluation about your IRS tax audit.

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