Receiving correspondence from the Internal Revenue Service (IRS) can be a very daunting experience. Letters from the IRS often contain unwelcome news. For example, the notice may be about an adjustment to taxes that means you now owe a considerable sum of money. Knowing what to do after receiving an audit notification is imperative.
It is important to note that the only way the IRS will contact you to let you know of an audit is via the mail. There are various types of audits, and some are typically more serious than others.
Random audits
Random audits are checks that ensure your tax return does not contain any fundamental errors. They are an in-depth review of your tax return rather than a search for specifics.
Correspondence audit
A correspondence audit is the least serious type. These audits can be handled completely by mail and will usually involve having to send in proof of deductions. The IRS typically prefers this method when there’s not a large amount of money involved.
Office audit
Being asked to come into an IRS office in person likely means you are facing a more serious audit. You will be required to collect specifically listed items on the audit documentation and bring them in. Failure to do so is likely to cause you even more problems.
Field audit
A field audit is the most serious of audits. It involves IRS agents visiting your home or office personally to conduct the audit. Field audits are rare. Thus, if you or your business is the subject of one, it is vital that you take it seriously.
Knowing the law relating to audits can help you keep your tax affairs in order and help you avoid legal problems. It is far more beneficial to take proactive measures in relation to tax affairs than land yourself in deeper trouble further down the line.