An Introduction to Tax Audits

After earning a BA in international relations from Luther College in 1991, Heidi Scott went on to earn her juris doctor at the Southern Illinois University School of Law. She now owns Schuyler Brown Land Title, based in Mt. Sterling, Illinois. From 1999 to 2014, Heidi Scott also worked as a tax attorney at the Illinois Department of Revenue, where she researched and wrote memoranda on problems with tax audit cases.

A tax audit is an examination of a taxpayer’s tax returns. It happens when the IRS suspects that there might be some inaccuracies or that fraud has occurred. The IRS will inspect all possible errors and problems in such cases.

The IRS may conclude that an audit is due based on several reasons. Individuals and companies with a balance due are sometimes flagged for audit, as are those that should have a larger or smaller refund. Also, an audit can happen because the IRS has problems with a return. They might not be able to identify the tax payer, need additional info, or have questions about the return, among other issues.

The audit can be conducted in several ways. Typically, the correspondence audit is the mildest form of audit. In such cases, the IRS only needs additional information. An office audit means an in-person talk with an IRS official. For a field audit, the IRS officials go to a taxpayer’s home or company. Finally, a random audit entails a detailed check on the return of a randomly selected taxpayer.