What is the purpose of a tax audit?

June 02, 2022 by Charla Suaste
Person looking over paperwork

It’s a normal, sunshiny day. You walk casually to your mailbox, pull out the contents and begin mindlessly rifling through various bills and advertisements, thinking about what you’re going to whip up for dinner. But then, an envelope with three little letters – I.R.S – stops you in your tracks. You tell yourself it’s probably nothing but, as you frantically tear open the envelope and scan the notice, you quickly find out that your tax return is being audited. Your mind is scrambling – “I feel like I filed my tax return correctly! Why am I even receiving such a notice? What is the point of a tax audit, anyway?”

Reactions like this are not uncommon – in fact, they’re instinctive. It can feel confusing and alarming to imagine the IRS poking around your tax return. But never fear – that's why TaxAudit is here! So, let’s talk about why you might be receiving an audit notice and what steps you should take to resolve it.

What is the tax gap?

First and foremost, let’s talk about the tax gap. Every year, the IRS expects to collect a certain amount of taxes from us as a collective. And every year, the gap between what taxpayers owe versus what they actually pay looms large. According to the Department of Treasury, the average tax gap hovers around $600 billion annually.

This enormous number is why audits exist. Some taxpayers, whether intentionally or not, may not make the proper claims on their return and, in turn, may not be paying the tax they rightfully owe. The loss of tax revenue further contributes to the tax gap – and IRS audits are an attempt to collect the funds required to close this gap.

Why did I receive this notice?

While it might feel like the IRS is picking on you, this is typically not the case. Many notices are actually computer-generated based on a formula developed by the IRS. Depending on typical filing norms, the system may detect a clerical or mathematical error on your return and issue a notice in response. The IRS’s Automated Underreporter Program (AUR) issues notices when a taxpayer’s return does not appear to match the information the IRS has on file from third parties such as employers, banks, and other financial institutions. For example, the IRS may issue a Notice CP2000, Notice of Proposed Changes to Your Return, if it appears a taxpayer may have omitted wages reported to the IRS. Of course, every notice is slightly different, and without knowing what type of notice you received, it will be impossible to know why you have received it or whether it’s even correct! However, determining the type and possible cause of an IRS notice is something your TaxAudit tax professional is happy to help you with.

How should I respond?

We are so glad you asked! As your favorite Audit Defense firm, we do not recommend paying any amount due before you have consulted with your TaxAudit tax professional. We also do not recommend responding to the IRS, whether via mail, by phone, or in person, without professional representation. This is where we come in! Upon receiving any notice from the IRS or state taxing agency, call us immediately so we can review the notice and step in on your behalf. When you are a member with us, we:
  • Defend both state and federal income tax returns
  • Provide an easy-to-use, secure portal for you to upload all documentation
  • Review your documentation
  • Explain your options and develop a strategy
  • Schedule and attend all audit appointments on your behalf
  • Ensure you never have to meet with or speak with the IRS
  • Make sure you pay no more tax than what you rightfully owe

If you are not a member with us and have not yet received a notice but would like the peace of mind that comes with knowing you have professional representation, you can purchase a TaxAudit membership on our website or call our Customer Service team at 800.922.8348 and they will be happy to help you out!

Tags: IRS, tax audit



Charla Suaste
Communications Content Developer


Charla Suaste joined TaxAudit back in 2007 and, over the past 14 years, she has worked in a variety of different roles throughout the organization, including as a Customer Service Representative, Case Coordinator, and Administrative Services Assistant. She now serves as the Communications Content Developer and is passionate about writing, editing, and making even the most complex concepts easy to understand. Outside of work, Charla enjoys traveling, listening to podcasts, and spending time in her garden.


Recent Articles

Tax Returns, plant, and $100 bills laying on a desk
What happens if your spouse overstated the deductions claimed on the return or substantially understated the income?  Are you still liable for the tax due?
wedding cake split with man on one side and woman on the other
Alimony payments may indeed be tax deductible if the divorce or separation instrument under which they are made was executed prior to 2019.
Double Taxation written on notepad
Most states that have income taxes offer a credit for taxes paid to another state on the same income, although how that credit is calculated is not identical.
File Cabinet with Documents
IRS notice CP05A is sent by the IRS to inform taxpayers that they need more information about the submitted income tax return before a tax refund can be issued.
This blog does not provide legal, financial, accounting, or tax advice. The content on this blog is “as is” and carries no warranties. TaxAudit does not warrant or guarantee the accuracy, reliability, and completeness of the content of this blog. Content may become out of date as tax laws change. TaxAudit may, but has no obligation to monitor or respond to comments.