Why Am I Being Audited By The IRS?

by admin on September 23, 2015

There are countless reasons you may be chosen for an IRS audit. Typically, the only time the selection is random, however, is if your tax return is entered into the IRS’s National Research Program. This program enables the IRS to study the taxpaying habits of a cross section of the country. You may not have made any mistakes if you are chosen for this reason, but the audit will not be any less thorough.

The IRS also runs several checks through computer systems, in which they compare your return to W-2s, 1099s and other bank information. If an error is detected, the IRS has three years from the date the return was due to conduct an audit.

One test the IRS runs is the Discriminant Inventory Function System (DIF). The system assigns points for every error you accrue. Once you reach a certain error score, you’re eligible for audit, and, according to the IRS, “the potential is high that an examination of your return will result in a change to your income tax liability.”

It’s not just outright errors and miscalculations that can alert the IRS to an incorrect return filing. They may also be curious about charitable donations, depreciation deductions, dependent exemptions, business expenses, and more. In some cases, a third-party informant will tip off the IRS.

You will receive notice of a field audit through the mail, never by e-mail. If you receive an e-mail notice, it’s a scam and you should contact the IRS immediately. The paper letter will provide you with a date by which you must contact the IRS to schedule an audit appointment. The letter will also assign you an IRS agent and list the documents the IRS wants you to produce. Even if you don’t have all of the documents in order by the date they request, do contact the IRS office before the deadline. Waiting too long to respond may arouse suspicion that you have something to hide. Before you contact the IRS though, give us a call so we can help you prepare. Person Huff CPA has the experience and expertise to guide you through the audit process and ensure the best possible outcome for you, no matter why the IRS has selected you to be audited.

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