Types of Audits
When a return is selected for examination, the audit may be conducted as an office examination or as a field examination.
i) Office Examination:An office examination is the typical method for most nonbusiness returns. There are two types of office examinations: correspondence and office. In a correspondence examination, the taxpayer is asked to explain or send supporting evidence by mail. In an office examination the taxpayer or his representative is asked to come to an IRS office and to bring specified documentation to support the return.
ii) Field Examination:A field examination is the typical method for business returns and complex issues. During a field examination, an IRS agent goes to the location where the taxpayer’s books and records are maintained or to the office of the taxpayer’s representative.
Preparing for an Audit
When the IRS notifies a taxpayer of an audit, it also notifies them of the tax return section(s) being audited and requests additional clarifying information. Based on the clarifying information requested you can develop an understanding of what areas the revenue agent will be targeting. The best defense is a good offense. When working with auditors we provide them with a neat, organized package of source documents that not only substantiate the amounts on the tax return, but are easy for them to follow. Most auditors consider this a treatand we prefer happy auditors! It’s not a trick that we prepare our annual tax return work papers in an organized fashion to allow for a seamless transition to audit packages.
L&B is here to help!
Please contact us immediately if your tax return has been selected for audit and we will be happy to assist you in responding to the auditor’s information document request as well as meet with the auditor on your behalf.