Whether you are an individual or a business owner, going through the IRS audit process can be nerve-wracking. You might feel anxious because of a problem or missed items that might cost you more in the long run.
These are typical assumptions after receiving the audit notice, but they might not always apply. The IRS selects returns for audits based on various factors, not just issues or inaccuracies. Before jumping to conclusions, it could be wise to think about whether your returns qualified for the audit because of the following:
- Some transactions made you appear like an abusive tax avoidance participant.
- Your computer scoring made you eligible for the audit, raising concerns for the IRS to review items in your returns.
- Your business or enterprise qualifies as a large corporation, which has annual audit requirements.
- Specific information in your payer reports does not match the returns, requiring further investigation.
- Your returns include other businesses that are also taxpayers chosen by the IRS.
- Your local IRS office has compliance projects subjecting you to an audit.
The reason behind your eligibility may also vary on a case-to-case basis, considering your business’s financial records and tax documents sent to the IRS. Despite seeming like a scary process, the agency has provisions to protect taxpayer rights, including standard practices and appeals procedures that may apply based on your situation.
Going through the tax audit process
No matter how prepared you are, it is easy to feel lost and confused when going through a tax audit. Sometimes, seeking legal counsel is the only way to feel truly ready, especially if items in your returns make you feel unsure about the outcome. In these scenarios, experienced guidance can also help you determine the appropriate steps to take, considering the audit’s progress and details.