Tax Audit Information

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Receiving an IRS audit letter can be a nightmarish experience. That’s why we’re here—so you’ll never have to face the IRS alone. The first step in getting tax audit help is to let us evaluate your IRS audit or notice letter.

If you are a current TaxAudit member, click here to report your tax audit notice. If you are not a current member, it only takes a few minutes to get us the information we need to give you a professional evaluation of your IRS tax audit notice. You won’t find better tax notice and return evaluation.

Here is what you can expect during our evaluation process:

A specially-trained professional will review your IRS audit notice, evaluate its seriousness, and clarify required actions. This is where “free” services advertised by other companies stop. Other companies charge hundreds or thousands of dollars to proceed.

Without any additional charges, our expert tax defense experts will review the related tax return and all other pertinent documentation in order to recommend the best possible strategy for proceeding. Most other tax services require large fees to probe your documentation deep enough to decide if they can help or not. If they can’t, you are still out the money.

After reviewing all important documents, we will schedule a telephone appointment with you to discuss our findings and give you recommendations. This phone conversation can be up to 30 minutes. You will know exactly what your IRS audit notice means and how to proceed. There will be no surprise fees. Only when necessary and when we are sure that we can help will we give you a flat fee quote for our Audit Defense Service*.

* If you do require our expert Audit Defense Service, we will apply your evaluation fee to your quote.
We understand the dread that comes with every audit letter from the IRS or state taxing authority. Don’t panic. Years of unparalleled expertise in tax return audit representation have enabled us to formulate these simple, logical steps to tax audit resolution:

Identify who the audit letter is from.
Are you being audited by the IRS? Your state tax authority? Take a look at our sample income tax audit notices.

Check to see if it is a form letter.
For example, it may only be a notice of change or action that will affect everyone within your state or tax bracket. A personalized letter, however, requires specialized attention.

Determine if the audit letter requires action.
Is there a mandate or deadline that requires action within a particular time frame?

Send it to TaxAudit for review.
If you are a TaxAudit member, click here to report your tax audit notice letter or contact our customer service department. If you are not a current member of TaxAudit, we can still help. For a small fee, we can review your letter. Begin the evaluation process online or by phone now.
An income tax audit occurs when the IRS or state taxing agency reviews your tax returns to determine if income, expenses, and credits are reported accurately. It begins with an audit letter, notice, or phone call. You may also receive a list of the records you will need to produce, as well as a request for an appointment.

What is the IRS looking for?

This varies case-by-case, but in general:
  • The IRS wants to verify that you have reported all income from all sources
  • The IRS wants to see receipts and proof of payment for the various
    expenses you have claimed on your tax return.
  • If there is unreported income or expenses that cannot be documented, the
    IRS will make adjustments to the tax return you filed resulting in a balance
    due plus interest and possibly penalties.

TaxAudit has decades of experience dealing with tax return audits. We can help make the experience of receiving an audit less frightening and answer your IRS audit questions. Please check out our expert audit defense protection services today!
With recent auditing budget increases, the IRS has become more aggressive about auditing individuals and businesses. Tax return audits are not just random or based on mistakes and “red flags.” Here are the eight most common types of income tax audits:

Mathematical Corrections
The IRS uses computers to find mismatches between names and Social Security numbers, earned income credit qualifications, filing status issues, estimated tax and withholding tax errors, estimated tax assessments, late filing penalties and interest, and a variety of other issues. Sometimes these audits require an appointment, and sometimes the IRS simply recalculates your tax return with a new tax balance, including interest and penalty assessments.

Income Document Matching
IRS computers match all pertinent forms—such as 1099s, W-2s, and K-1s—relating to your name, Social Security number and what you report on your tax return. If the numbers do not match your tax return, an audit occurs. The audit could begin with a phone call, an in-person meeting, or a simple bill itemizing the additional taxes, interest, and penalties.

DIF Scoring
The IRS scores every tax return with a discriminate information function (DIF) number. It is based on calculations used to identify income tax returns with the highest likelihood of tax change on audit. The DIF score increases for various items, such as Schedule C or auto expenses, and decreases for other items (the use of a paid preparer). IRS classifiers review high DIF score tax returns and select which ones and which items will be audited.

Additional Documentation Requests
These audits require you to mail documentation for an item or items on your tax return to an IRS auditor. This may include receipts and proof of payment for the items being examined. For example, if they are auditing your charitable contributions, you will need to provide copies of the receipts from those organizations and copies of the canceled checks to verify your reported numbers. The IRS will disallow any contribution that you cannot prove and will then issue a bill for the balance due, including interest and penalties.

These are the audits that have received the most publicity in the last several years. Congressional pressures on the IRS coupled with an increase in funding have dramatically increased audits. This audit begins with a phone call or letter from the IRS. The phone call is designed to solicit information before the actual face-to-face meeting. During the audit appointment, the IRS will examine items on your tax return that could result in a larger tax bill or an audit of other tax years.

National Research Program (NRP)
This audit is the most intrusive, as it thoroughly examines tax returns line by line. For instance, if you claimed a child as a dependent, you would need to provide the birth certificate as proof the child is yours and proof that he or she was living with you during the tax year being audited. This process may continue through every line of your income tax return.

Selecting a return for audit does not always suggest that an error has been made. Returns may be selected using a variety of methods, or the IRS can randomly select an individual tax return for audit.

Financial Status
Your standard of living and other related factors could also trigger a tax audit. Auditors use public records and statistical data to trace spending and changes in wealth to prove that you have unreported income. Some of these records include tax returns for all open years, credit reports, property tax records, business license applications, motor vehicle records, 1099 information, currency transaction reports and SEC filings. Due to potential abuse of these techniques, Congress limited their use in 1998, stating that the IRS cannot use financial status or economic reality techniques unless they have a reasonable indication that there is a likelihood of unreported income. This law, however, does not specifically define “reasonable indication.”

IRS Special Projects
The IRS annually identifies The Dirty Dozen—the 12 most blatant tax scams. They use this list to identify income tax returns for audit.

Fortunately, TaxAudit can help.
If you think any of your current or past income tax returns fall under one of these high-risk categories, or if the IRS has already contacted you with intent to audit you, TaxAudit can help. Learn more about our expert Audit Defense Services.
Unfortunately, intimidation is a key element in how the IRS does business. Because many taxpayers have only a marginal understanding of taxes, scare tactics go a long way. As your personal tax champion, TaxAudit evens the playing field. Our expert team of experienced Enrolled Agents, CPAs, and attorneys thoroughly understands IRS policies and gives you a clear advantage.

Here are eight reasons why you should never represent yourself:

1. It takes experience. Our representatives handle more income tax audit cases in a single month than most tax attorneys and accountants do in a lifetime. This full-time approach to defending our clients develops unparalleled expertise you won’t find anywhere else.

2. The IRS knows you are at a disadvantage. A qualified representative understands more about the IRS and taxes than the average taxpayer.

3. You’re emotionally involved. It’s natural to act defensively when “attacked.” To TaxAudit representatives, it’s business—we view the situation with absolute objectivity. This calm and collected attitude gives you a major advantage.

4. Once you say it, you can’t take it back. The IRS is ready to pounce on anything you say that can help their audit pay off. As your representative, a TaxAudit professional presents your situation in a language that won’t be misunderstood.

5. Misstatements can hurt. In fact, they can lead your auditor to take justifiable positions against you. TaxAudit advocates know exactly how to avoid these traps and will never put you in harm’s way.

6. Success requires knowledge. TaxAudit professionals know exactly which areas of your tax return can generate a refund or reduce the impact of lost deductions.

7. Victory requires strategy. Your case must be presented in a manner that will close the audit as quickly and favorably as possible. Your TaxAudit representative knows how to do this.

8. Meeting with the IRS is intimidating. As your personal representative, we meet with the IRS so you don't have to.

Let the professionals at TaxAudit defend you in your IRS or state audit. Protect yourself before an audit by becoming a TaxAudit member today. If you have already received a tax audit notice and are not a member, let us evaluate your notice and give you a quote for our expert Audit Defense service.

Having an expert represent you not only saves time, it provides peace of mind.
The IRS sends out various types of audit letters. The IRS audit letters that are sent are largely dependent on the issue(s) in question.

Unreported or misreported income and calculation errors are typically discovered in the Automated Under Reporter (AUR) system and most commonly communicated to the taxpayer through a CP2000, CP2501 or similar IRS audit notice. These types of IRS audit letters will not generally include the word “audit.”

IRS notices are also issued when the IRS determines that additional information is required before the return can be fully processed. These letters may make simple requests for copies of missing forms, or they may request additional information on items such as dependency exemptions, Head of Household filing status, and qualifications for the Earned Income Credit. Refunds will generally be held or only partially paid prior to the receipt of the requested information. These types of IRS audit letters will typically not use the word “audit” on them, but could lead to an in-depth income tax audit.

IRS examination letters are used to communicate expense verification and comprehensive examinations handled through the IRS service center and local field offices. IRS examinations may be handled by correspondence (correspondence exam), in an IRS local office (office exam), or at the taxpayer’s place of business or residence (field exam).

A tax return may also be selected for IRS examination because it received a high score from the IRS’s computer program, the Discriminant Inventory Function System. Less common are National Research Program audits, which are randomly selected.

No matter what type of IRS audit letter or notice you receive, the experts at TaxAudit are ready to help. Being audited by the IRS can be frightening and confusing. Our income tax audit experts will answer your IRS audit questions and provide expert audit defense.

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