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Let’s Talk About That Scary Subject: Tax Audits


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A tax audit is the examination of an individual’s or organization’s tax return by the Internal Revenue Service (IRS), to verify that the income and deductions stated are accurate.

The IRS is also responsible for enforcing the Internal Revenue Code. To ensure the tax return is completed correctly, an individual or business will usually engage a professional tax service provider to prepare their tax return. Tax services are also provided online by tax preparation software, and in some cases, usage of the software is free.

 A taxpayer whose tax return is selected for examination will go through any of these types of audits:

Correspondence Audit: The IRS sends a letter in the mail requesting more information about a tax return or correction to a tax return.

Office Audit: Individuals or businesses take their tax documentation to an IRS office to verify the tax return information.

Field Audit: The IRS sends auditors to a taxpayer’s home, place of business or accountant’s office to examine their books and verify the accuracy of information in the tax return form.

Rights of the Taxpayer

A taxpayer selected for an audit has a right to: know the need for the audit, privacy and confidentiality, representation, and appeal disagreements.

Red flags:

As a taxpayer selected for a tax audit, you might narrow your selection down to using a professional with expertise in tax services, or ignorance about a key requirement.

There are usually red flags: failure to report all taxable income, too high of an income, high deductions in comparison to income, taking large charitable deductions, claiming rental losses, and yes, inefficient tax services by the tax preparer.

To handle your issue, you should find out from the IRS why you were selected, determine the type of audit, organize the relevant documents for the audit, be polite and provide responses quickly. It is also advisable that you attend the tax audit with a tax service provider like the tax preparer or tax lawyer.

And of course, if you need help with any tax service, you can contact us at Nationwide Tax Solutions!

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