Returns are selected by the IRS for audit using a variety of methods, including:
- Random selection and computer screening based solely on statistical formula.
- Document matching.
- Related examinations (such as auditing the owners of a business that is also being audited).
The most common type of audit we see is the correspondence audit, which usually originates from a document matching error. If the IRS computer has a document stored in its database with your social security number, and isn’t able to match that document up with an entry on your tax return, you will most likely get a document matching notice in the mail.
Document matching notices can usually be resolved in short order, but sometimes an amended return must be filed. Many times the returns are correct as filed and the IRS just needs to be given some additional information, or the IRS proposed adjustment is simply wrong. It’s important that you forward a copy of all tax notices you receive to your tax advisor in a timely manner as there are certain time periods during which you must reply, file an appeal, etc.
Filing a complete and accurate return using a tax professional will help minimize your chances of being selected for audit.
As CPA tax professionals, we are subject to strict standards regarding our CPA credentials including licensing, continuing professional education, and ethics. Our doors are open and we do tax work year round; not just once a year, and we keep up with tax news, law, and legislation daily, not just when it’s time to file your return.
Do you have an IRS audit story to share? We’ve seen some strange things over the years; if you’ve had an unusual experience, please share!
