What Happens During an IRS Audit?

We have all heard the horror stories of those that have faced an audit from the IRS. Having the most powerful financial agency in the world question the accuracy of your tax return is definitely quite scary. Perhaps the most stressful aspect of an IRS audit is the uncertainty of not knowing what to expect and what the final outcome will be. Audit IRS

In general, there are four ways the IRS typically audits taxpayers. Each process begins by mail:

  • Automated Adjustment Notices: Also known as CP-2000 forms, these are automated notices that are part of the IRS Automated Underreporter Program (AUM). Usually the letter will point out a discrepancy in the taxpayer filing and a “proposed” balance due to fix your mistake. Taxpayers have 60 days from the time of receipt to appeal this notice. If no appeal is made, the additional amount is assessed and the IRS will attempt to collect it.
  • Correspondence Audits: These are letters requesting additional information about your tax return. Usually, the IRS is looking for supporting documentation to justify a credit or deduction (or series of deductions) you claimed. If you do not respond to the notice within 30 days, the credits or deductions in question will be disallowed.
  • Office/Field Audits: In an office or field audit, you receive a letter from the IRS either asking to you to bring certain documents (pertaining to your tax return) to a local office or stating that an IRS agent will come to your home or place of business to conduct the audit. In the case of a field audit, you are requested to contact the office to schedule a mutually convenient time for the agent to come to your location.
  • Taxpayer Compliance Measurement Program (TCMP) Audit: This is the most extensive type of audit and is conducted for informational purposes. Those unfortunate enough to be selected for a TCMP audit must substantiate every portion of their tax return, even their marriage and birth certificates. Officially, the TCMP was discontinued in the 1980s during the Reagan Administration, but there is frequent talk that the IRS may be bringing it back (or may have already secretly brought it back) under a different name.

If you have received any type of audit notice from the IRS, you should not deal with this situation alone. Any kind of error in providing documentation can cost you both financially and in some cases your freedom as well. Speak to your local professional accountant immediately about the implications of the audit notice you received and your best way forward in securing a favorable outcome for your case.


Scroll to Top