What Happens When You Get Audited by the IRS

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Have you ever wondered what happens if you get audited by the IRS? The thought of an IRS audit can be intimidating, but understanding the process can help alleviate some of the anxiety. In this article, we will guide you through the ins and outs of an IRS audit, providing valuable information to help you navigate this potentially stressful situation.

Understanding IRS Audits

Definition and Purpose of an IRS Audit

An IRS audit is an examination of your tax return, financial records, and supporting documents to ensure their accuracy and compliance with the tax laws. The purpose of an audit is not to instill fear but to maintain fairness and uphold the integrity of the tax system. It ensures that taxpayers are paying the correct amount of tax they owe and helps uncover any discrepancies or errors.

Different Types of IRS Audits

There are various types of IRS audits, each with its own focus and level of complexity. The most common types include:

  • Correspondence Audits: These audits are conducted through mail and usually address minor issues or discrepancies on your tax return.
  • Office Audits: In an office audit, you are asked to visit an IRS office to provide additional documentation or clarifications.
  • Field Audits: Field audits are more comprehensive and are conducted at your place of business or residence. An IRS agent will visit you to examine your records and conduct interviews.
  • Taxpayer Compliance Measurement Program (TCMP) Audits: TCMP audits are the most extensive and cover all aspects of your tax return. They are conducted to gather statistical data for research purposes.

Factors That May Trigger an IRS Audit

While the IRS selects tax returns for audit through a combination of random selection and computer screening, certain factors may increase your chances of being audited. These include:

  • Reporting high-income levels
  • Claiming excessive deductions or credits
  • Inconsistencies or errors in your tax return
  • Engaging in certain business activities or professions that are more prone to audits
  • Being associated with others who are being audited
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What to Expect During an IRS Audit

Initial Contact and Notification from the IRS

If your tax return is selected for an audit, the IRS will notify you through mail or sometimes by phone. The notification will explain the reason for the audit, specify the year(s) under examination, and provide instructions on how to proceed. It is crucial to respond promptly and provide the requested information within the given timeframe.

Gathering and Organizing Your Financial Records

Before meeting with the IRS auditor, you should gather and organize all the relevant financial records, such as receipts, bank statements, invoices, and any other supporting documents. Having your records well-organized demonstrates your cooperation and makes the audit process smoother.

Meeting with the IRS Auditor

During the audit, you will have a face-to-face meeting with the IRS auditor. It is essential to approach this meeting calmly and professionally. The auditor will ask questions and request documentation to verify the information on your tax return. Cooperate fully, answer truthfully, and provide only the requested information. Remember, it is your right to consult with a tax professional during the audit process.

Providing Documentation and Answering Questions

As part of the audit process, you will be required to provide documentation to support the income, deductions, and credits claimed on your tax return. The auditor may also ask questions to gain a better understanding of your financial situation. It is crucial to be prepared, provide accurate information, and maintain open communication to ensure a fair and efficient audit.

Potential Outcomes of an IRS Audit

After completing the audit, the IRS will determine whether your tax return is accurate or if adjustments need to be made. There are three possible outcomes:

  1. No Change: If the IRS finds no discrepancies or errors, your tax return is considered accurate, and no changes are made.
  2. Agreed Changes: If the IRS identifies discrepancies or errors, you may agree with the proposed changes and sign an agreement form. This will result in an adjustment to your tax liability.
  3. Disagreed Changes: If you disagree with the proposed changes, you have the right to challenge them through an appeal or in tax court.
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Common Misconceptions about IRS Audits

Misinformation and misconceptions about IRS audits can lead to unnecessary anxiety and fear. Let’s debunk some common myths and clarify important points:

Myth 1: Audits are Always a Result of Wrongdoing

Contrary to popular belief, not all audits are triggered by suspicious or fraudulent activities. Many audits are random selections or result from simple errors or inconsistencies in tax returns.

Myth 2: Audits Always Lead to Penalties

While audits can result in penalties if significant errors or intentional fraud is discovered, most audits only result in adjustments to your tax liability. If you have acted in good faith and can provide reasonable explanations for any discrepancies, penalties can usually be avoided.

Myth 3: The IRS Will Confiscate All Your Assets

The IRS’s primary goal is to ensure compliance with tax laws, not to seize your assets. They are more interested in resolving discrepancies and collecting any additional taxes owed rather than causing financial hardship.

Frequently Asked Questions about IRS Audits

What are the chances of being audited by the IRS?

The chances of being audited by the IRS are relatively low. According to recent statistics, less than 1% of individual tax returns are selected for an audit. However, certain factors, as mentioned earlier, can increase your likelihood of being audited.

How long does an IRS audit take?

The duration of an IRS audit varies depending on its complexity and the cooperation of the taxpayer. Simple audits can be resolved within a few weeks, while more complex cases may take several months or even years to complete.

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What are the possible penalties for failing an IRS audit?

Penalties for failing an IRS audit can range from additional taxes owed to fines and interest on the underpaid amounts. Intentional fraud or tax evasion can result in criminal charges.

Can you appeal the outcome of an IRS audit?

Yes, if you disagree with the outcome of an IRS audit, you have the right to appeal the decision. The appeals process allows you to present your case to an independent IRS appeals officer who will review the facts and make a fair determination.

How to avoid getting audited by the IRS?

While there is no foolproof way to avoid an IRS audit, there are steps you can take to minimize your chances. These include accurately reporting your income, maintaining proper documentation, and seeking professional tax advice when needed.


Getting audited by the IRS may seem daunting, but by understanding the process and being prepared, you can navigate it with confidence. Remember, an audit does not necessarily imply wrongdoing, and the outcome can often be resolved through open communication and cooperation. By following the guidelines provided in this article, you can effectively manage an IRS audit if it ever comes your way. Stay informed, stay organized, and seek professional assistance when necessary to ensure a smooth audit process.

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