There are several kinds of IRS audits. If your tax return has been selected for an audit, the IRS audit letter you receive should indicate the type of audit the IRS will perform.
What is an Office Audit?
In an office audit, the taxpayer is expected to arrive at his or her local IRS office for an in-person meeting with an IRS examiner. In an Office Audit, you are requested to bring documentation to an IRS office at a specific time and date. The IRS office audit processis more formal than the correspondence audit, and usually it is conducted for more serious issues on the tax return as well. You may also be selected for an office audit for tax items that do not easily lend themselves to clarification through the correspondence audit format, such as verification of rental income or a business’s basis in its assets.
How Will I know that I have been Selected for an Office Audit?
As with other kinds of IRS audits, you will know that you have been selected for an office audit when you receive written notification from the IRS. The IRS audit letter will list a specific date and time for a face-to-face meeting at the local IRS office. In addition, the notice will contain a list of the tax items that the IRS will investigate. The letter details the items on the return that are being examined. The letter will also contain IRS requests for information pertaining to those items.
When Will the Office Audit Take Place?
The office audit will take place at the time and date indicated on the written notification from the IRS. However, this time and date can be easily changed. The time and date indicated on the letter is chosen at random by the IRS, and the IRS allows taxpayers to phone or write the agent and reschedule the appointment for a more convenient time.
What Can I Expect During an Office Audit?
Although more formal than a correspondence audit, an office audit is generally informal and relaxed. An office audit is not as thorough as a field audit, and usually can be completed in several hours. Common issues for an office audit include itemized deductions, employee business deductions, and less complex Schedule C and Schedule E issues. For an office audit to proceed smoothly, the taxpayer should be prepared to present documentation in an organized manner. During the office audit, the auditor will record his or her observations on a Form 4700 before preparing a final report. The role of the auditor during the office audit is to verify income and deductions.
Strategies for Surviving an Office Audit
There are several strategies the taxpayer and his or her representative can employ to make an office audit proceed smoothly. The most important strategy is organization. Before attending an IRS office audit, the taxpayer will receive a notice listing the items to be examined during the audit. This prior notice gives the taxpayer the opportunity to organize and gather all records and documentation needed to present the case to the IRS during the office audit.
Another strategy for completing an office audit is to keep your responses brief yet responsive. You should honestly respond to questions from the IRS tax auditor, but there is no need to offer additional information once you have answered the questions honestly.
As with all audits, there is the possibility of the revenue agent deciding to expand the audit into additional years and types of tax. If you may have discrepancies that are not under investigation in the initial audit, then you may want to seek the help of an experienced tax attorney to represent you through the audit and mitigate the possibility of audit expansion.
The Tax Lawyer - William D Hartsockhas been helping clients successfully navigate IRS audits since the early 1980’s. Mr. Hartsock offers free consultations with the benefit of attorney client privilege. Call to schedule your free consultation today!