What Does It Mean to be Audited by the IRS?

What Does It Mean to be Audited by the IRS?

Being Audited By The IRS In 2021?

Contrary to the belief, IRS audits are very rare occurrence at this time. Statistically, the average citizen has less than 1 percent chance of being IRS audited.

Though, being audited isn’t the end of the world. It doesn’t even necessarily mean you owe money to the IRS or have been illegally conducting any activity.

An audit is a review of an individual or organization’s financial information to ensure information gets reported accordingly as per tax law.

How Does The IRS Conduct Audits?

There are two ways in which the IRS conducts audit. One is by correspondence and the other is face to face. But there are some other ways in which the IRS carries out audits, based on severity of tax services Santa Monica.

Correspondence audit- a mail-audit process that requires you to send proper documentation to the IRS office.

Office audit- by this the IRS asks you to bring documents to their local office Field audit- a n IRS agent comes to your office or home to audit in person. It is complex and takes longer.

Why Am I Being Audited?

There are many reasons why you might be on the receiving end of an audit. The IRS always updates and re-evaluates their tax check systems. Through data algorithms, the IRS develops norms for a given tax return.

However, at times the audit is perform is performed as a check on the validity of their normal data. Other times, auditing one person or business may result in the IRS auditing other related tax returns.

What Are Audit Triggers?

• Audit triggers are automatic red flag alerts for the IRS. These triggers are put in place to help streamline processing of tax returns every year. It may occur for several different reasons.

• As long as you can provide the appropriate documentation when prompted by the IRS, then you will receive no fines.

• If the triggers result in the IRS changing your tax return, you may owe money and potentially serve jail time.

What Do I Need To Provide To The IRS? Once the IRS initiates an audit, they may request different types of documentation and proof to facilitate the process. Hiring an experienced tax accountant Santa Monica can help.

They will provide you with written list of documents needed to prove or disprove the tax return discrepancies.

You can contact your auditor to find out what form is required for each documents. The IRS will provide you with a written list of all documents needed in and in what form they accept them.

Conclusion One of the best ways to deal with the situation is by hiring a tax accountant.

If you didn’t file your taxes, you must contact the tax advisor who prepared the tax return immediately upon receiving the audit letter from the IRS. If you are confused, worries and intimidated by the IRS audit process, you must consider hiring a lawyer to navigate through the process.

THANK YOU To know more visit us : https://jarrarcpa.com/tax-accountant-santa-monica/