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What happens during an IRS audit?

No taxpayer wants to learn of an IRS audit. While intimidating, most audits have a relatively fast resolution. They are not always an indication of wrongdoing, just that the IRS would like more information.

While every situation is unique, there is some general information that can help you should you receive notice of an audit. Here are a few things you can do.

Why audits occur

Some audits occur randomly, while certain circumstances trigger others. For example, if you report a much higher income than previous years, the IRS may flag your return for audit. If you associate professionally with a person who was recently audited, the IRS may also ask to see your returns. Anything out of the ordinary on your return can trigger an audit, which highlights the importance of accuracy.

What to expect during an audit

You will receive a letter from the IRS explaining the issues and asking for additional information. In many cases, you can simply provide the information via mail or email to clarify the issue. This is what typically occurs when people receive random audits. In general, you have 90 days to respond.

If the issue is more complex, an agent will conduct an interview with you in person. In this, you may report to their office, or they may report to yours if you are a business owner.

What you need during audits

Any information that can help make your case is useful during the audit. This can include receipts, previous tax returns, invoices, transactions logs, medical records, legal documents, deeds, and any other information that shows your return contained accurate information.

When you receive notice of an audit, remain calm. Comply with the IRS’s directions and offer the information requested to quickly resolve the issue.