IRS Tax Audits: An Overview of the Audit Process

Posted in News on August 17, 2020 | Share

If you are being audited by the Internal Revenue Service (IRS), there is a lot you need to know. While it may be possible to avoid interest and other penalties with a strategic and effective defense, an IRS tax audit can also lead to criminal charges for federal tax evasion if you are not careful. To protect yourself, you need to respond to the audit appropriately, and you need to rely on the advice of an experienced Washington D.C. IRS tax lawyer.

Why are You Being Audited by the IRS?

There are several potential reasons why the IRS has chosen to audit your federal tax returns. First, it is possible that the agency selected you at random. The IRS conducts random tax audits to uncover tax fraud and tax evasion; however, these represent just a small portion of the hundreds of thousands of tax audits the IRS performs each year.

It is far more likely that the IRS has chosen to audit your tax returns for a specific reason. For example, some of the most common triggers for IRS tax audits include:

  • An “irregularity” flagged by the IRS’ computer systems;
  • Evidence of financial involvement with another taxpayer that is currently being audited; and,
  • Being identified in third-party financial disclosures, such as banks’ disclosures of offshore accounts.

An IRS tax audit may focus on a single tax year, or it may involve an in-depth review of multiple years’ worth of your federal returns.

What Happens During an IRS Tax Audit?

What happens during an IRS tax audit depends on the specific type of audit that is being performed. From a procedural perspective, the IRS conducts three main types of tax audits: (i) correspondence audits, (ii) office audits, and (iii) field audits. However, IRS tax audits can also be characterized by the issue (or issues) that are under scrutiny. For example, some of the more common types of IRS tax audits include:

  • Correspondence and Face-To-Face IRS Tax Audit
  • Individual/Personal IRS Tax Audits
  •  Business IRS Tax Audits
  • International IRS Tax Audits of Companies and Individuals
  • Cryptocurrency IRS Tax Audits
  • Eggshell IRS Tax Audits
  • Trust Fund IRS Tax Audits
  • Employment IRS Tax Audits
  • Criminal IRS Tax Audits
  • Gentlemen’s Club IRS Tax Audits
  • IRS Small Business and Professional IRS Tax Audit
  • IRS Real Estate Audit

In general, during an IRS tax audit, the IRS will examine the taxpayer’s return in detail and request pre-existing documentation to substantiate the information contained in the return. IRS agents may conduct interviews as well. Once you receive notice of an IRS tax audit, you are encouraged to work with experienced federal tax counsel like Washington, D.C. IRS tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, promptly to ensure that you protect yourself (and your business, if applicable) during the tax audit process.

What Occurs After an IRS Tax Audit?

After your audit, the IRS will issue a Revenue Agent’s Report (RAR). If the audit indicates that you have underpaid your federal tax liability, the RAR will require an additional tax payment, plus interest and penalties. At this point, you have the right to challenge the outcome of your audit, and your attorney can help determine your next steps while also assessing the risk of a follow-on criminal tax investigation.

Contact Washington D.C. IRS Tax Lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group

Is the IRS tax auditing your federal returns? If so, we encourage you to contact us immediately—before you submit anything to the IRS. To schedule a confidential consultation with Washington D.C. IRS tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, call 202-349-4033, email or contact us online now.

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