Audits of income tax returns are often requested at random, and they can occur at any time. However, audits can be triggered by large discrepancies between your itemized deductions and profits or losses. The IRS also places heightened focus on offshore credit card users; high-risk, high-income taxpayers; high-income non-filers; and unreported income. Furthermore, there is no minimum or maximum time that must elapse between audits of the same taxpayer, so an audit can happen during any year, even if you have just had one.
Gather all of your bank statements, cancelled checks, receipts, and other financial records that are relevant to your tax return for only the year that you are being audit. You should keep the information you provide limited to that which the auditor is entitled and avoid providing any unnecessary information. Furthermore, do not provide information for other tax years because doing so may result in an audit of more of your tax returns.
Your odds of avoiding an adjustment (additional tax obligation) are low. Due to computers and evolving technology, the IRS is almost assured to audit tax returns in which an adjustment will result. Aim to minimize your adjustment amount rather than trying to avoid an adjustment altogether.
If you do not agree with the auditor's assessment of your tax return, you can file an appeal in the federal Tax Court. The Tax Court hears cases in which the IRS determines you owe taxes and penalties of $50,000 or less per tax year. The Tax Court is similar to a small claims court. There is no jury and the judge's decision is final. In contrast to small claims court, however, legal representation is allowed.
Tax laws change frequently, which can contribute to the complexity of tax audits, so it would be wise to contact an attorney if you have any questions about your audit. An attorney familiar with federal tax laws can help you identify the information you need for your audit with the IRS, and if necessary, can help you bring an appeal.
Last Modified: 06-02-2015 01:48 PM PDTLaw Library Disclaimer
We've helped more than 4 million clients find the right lawyer – for free. Present your case online in minutes. LegalMatch matches you to pre-screened lawyers in your city or county based on the specifics of your case. Within 24 hours experienced local lawyers review it and evaluate if you have a solid case. If so, attorneys respond with an offer to represent you that includes a full attorney profile with details on their fee structure, background, and ratings by other LegalMatch users so you can decide if they're the right lawyer for you.