A tax audit, otherwise known as a ‘tax return examination’, is conducted by the IRS. The aim is to find out whether an individual or organization’s reports of income and outgoings are correct. The fact is, the number of people who are getting audited has gone down. Recent figures suggest that less than 1% of American citizens are audited by the IRS.
If you are wondering why this is, there are two reasons. Firstly, due to decisions by the IRS, the number of tax auditors has reduced. As a result, the number of tax audits the IRS is able to conduct has reduced.
The IRS examine a majority of tax returns; however, a tax audit is a detailed scrutiny of your tax return. People get audited if their tax return seems extraordinary. For instance, they report zero earnings, their income goes up significantly, or they are based, and so on and so forth. Based on what is present on a tax return, the IRS can decide to take an individual or business to court.
There are different types of tax audits:
1) Mail audit
2) Office audit
This is the audit that makes some people nervous. For an office audit, the IRS will request that you visit them at your nearest IRS office. Office audits delve deeper into your tax return, and include questions being thrown at you. Prior to an office audit, the IRS may request that certain documents are brought in. Due to the high pressure nature of an office audit, some people exercise their right to have an accountant or lawyer represent them. Secondly, some people prefer to be represented in this way in order to prevent themselves from saying anything incriminating
3) Field audit
A field audit is the most detailed tax audit the IRS can carry out. For this, every single cent on your tax return form must be accounted for. As the name suggests, an IRS agent will visit your home or place of business. They will then investigate each item on the tax return sheet. Generally speaking, it is field audits that are most likely to land people in trouble. Forget to report a single receipt and it is almost guaranteed that it will be uncovered during a field audit.
What happens after an audit?
For most people, a tax audit is just someone that requires them to spend more time satisfying the needs of the IRS. Unfortunately for some, a tax audit leaves them shaking because they know that they have done something wrong.
An audit can end one out of three ways:
1) The IRS is satisfied with their findings and decide not to change anything on your tax return. You are free to go about your business.
2) The IRS isn’t happy with something they found on your tax return. They elect for the tax return to be amended. This may put you into a higher tax bracket. If that is the case, you may owe them money. Therefore, the debt can be paid off in full, or a repayment plan can be arranged.
3) The IRS has seen evidence of tax evasion. More often than not, legal proceeding will be arranged. This is when it is best to get an experienced and qualified lawyer.
ChicagoTaxLawyerFirm.com has experienced, competent, and reputable lawyers. Therefore, whether you have been sent a tax audit request, are afraid of what might happen once you reply, or just want current information about tax audits, get in touch with them today. They can smoothen the whole process and increase the probability of coming out of the process unscathed. Tax audits don’t have to leave you shaking once you have a lawyer from ChicagoTaxLawyerFirm.com on your side.