If you receive an IRS audit notice, following these best practices will help ensure a smooth process: Step 1: Review and Verify the Notice When you receive an audit notice, make sure it arrives by mail—IRS notices are never sent via phone or email. The notice informs you that your tax return has been selected … Read more

The chances of being audited by the IRS are generally low, with less than 1% of individual and corporate tax returns audited each year. However, certain factors can significantly increase the likelihood of an audit. For individual taxpayers, the IRS audited an average of 0.44% of returns between 2013 and 2021, but this percentage isn’t … Read more

Mail Audits A mail audit is the most straightforward type of IRS audit, typically initiated by a letter requesting specific information to verify items on your tax return. The IRS may be seeking clarification on a particular aspect of your return, such as income, deductions, or credits. Before starting the resolution process, it is key … Read more

Here are the top 10 reasons the IRS may audit a taxpayer: 1. High Income High-income earners are more likely to be audited. The IRS focuses on wealthier individuals because underreporting or errors in tax filings can result in larger amounts of unpaid taxes. Historically, taxpayers earning more than $400,000 face significantly higher audit rates … Read more

A tax professional plays a critical role during an IRS audit by providing guidance, expertise, and representation. Here’s how a tax professional can assist throughout the audit process: Reviewing the Audit Notice and Explaining the Audit Process Tax professionals, such as enrolled agents, CPAs, or tax attorneys, help interpret the audit notice. They’ll explain what … Read more

Handling a state tax audit requires a similar approach to managing an IRS audit but with a focus on state-specific tax laws and procedures. Here’s a step-by-step guide on how to navigate the process effectively: Understand the Audit Notice The state tax authority will send an audit notice specifying the tax year(s) under review, the … Read more

After an IRS or state tax audit, the outcome can result in several possible scenarios, depending on the findings of the audit. Here’s what typically happens: Audit Conclusion Once the audit is complete, the IRS will notify you of their conclusion and findings. The report details any decided changes made to your tax return, including … Read more

Correct the Oversight If the unreported income was due to an oversight, you will want to inform the IRS that you agree with the proposed tax liability increase and plan to pay the new liability. It is important to show good faith. Some situations may allow for a potential reduction of penalties, due to first … Read more

Avoiding common tax filing errors is essential to ensure accuracy and compliance with IRS regulations, which can help you avoid audits, penalties, and interest. Here are some tips to help you steer clear of the most frequent mistakes: Report All Income Include all forms of income, even if you don’t receive a W-2 or 1099. … Read more

Audit Reconsideration If you disagree with the results of an IRS audit and want the decision reviewed, you can request audit reconsideration. This process allows you to present new information or arguments that the IRS did not consider during the original audit. There are a few situations in which audit reconsideration is eligible to be … Read more

A CP2000 Notice from the IRS highlights discrepancies between the income you reported on your tax return and information provided by third parties such as employers and financial institutions. The notice proposes additional tax based on the underreported income, along with potential penalties and interest, such as accuracy-related penalties. Taxpayers have two primary options for … Read more

The length of time you should keep tax records and supporting documents depends on several factors, such as the type of document and your specific tax situation. Here are the general guidelines: Tax Records: General Rule This is the standard statute of limitations, during which the IRS can audit your return, or you can file … Read more

Typical Audit Timeframes The IRS typically has a three-year window to audit a tax return, starting from either the original due date or the date the return was filed, whichever is later. If an audit is not initiated within this period, the IRS generally cannot reassess the return or impose additional taxes. Extended Audit Period … Read more

IRS audits are rare. However, when the IRS audits a taxpayer, there is a 90% chance that there will be an additional tax bill. There are many ways the IRS can select you for an audit.  However, it is rare for the IRS to select you “randomly” for audit. In most cases, there is a specific reason … Read more

When you receive an IRS CP2000 Notice, it indicates the IRS has found a discrepancy between the income you reported on your tax return and the information reported by third parties like employers or financial institutions. Here are five important steps to follow. 1. Review the Notice and Identify the Discrepancy The CP2000 notice will … Read more