The last thing you want to receive in the mail is a letter from the IRS. This is particularly true if it states that your tax return is being audited.
A tax audit is a formal examination by the IRS to verify the information included on your return. It can also be used to uncover fraud, such as hiding income and claiming deductions and credits you don't qualify for.
The IRS sends tax audit notifications for many reasons, including:
- You have a balance due
- You are due a smaller or larger refund than expected
- They have questions about your return
- They want to verify your identity
- They need additional information
- They have altered your tax return in some manner
- There are delays in processing your return
There are four distinct types of tax audit:
- Office audit
- Field audit
- Random audit
While all of these are serious, an office audit and field audit are the most advanced. For example, with a field audit, an IRS agent will visit your home or business.
Since a tax audit has the potential to lead to bigger problems and serious consequences, it's important to closely review all correspondence before deciding what to do next.
Also, you don't want to say or do anything to make things worse, so don't hesitate to consult with your tax professional and/or a tax attorney.
A tax audit doesn't always result in owing money or criminal charges, but one or both of these things could happen. That's why it's so important to protect your legal rights at all costs.