What is a Tax Audit?

Editor’s Note: Got an IRS notice? Navigating the IRS while you’re navigating your vacation plans and busy summer activities can be daunting. We can help. Tax professionals who deal with the IRS regularly can help and they know the steps to take to resolve the matter and get the best outcome. If you don’t know how to proceed, enlist the help of a tax advisor so you can enjoy summer! Make an appointment for a free consultation by calling 855-536-6504.)

A tax audit means the IRS is examining your tax return to verify the accuracy of your income, deductions, and/or credits. The audit could cover one or more items on your return, or the entire return.

Why would your tax return be audited?

The IRS may examine a tax return when one or more items appear to be incorrect and require further scrutiny. The IRS may also select a return for audit at random.

Are there different types of tax audits?

Yes, there are three primary types of IRS audits: mail, office, and field.

1 – Audits via mail

A mail audit is the simplest type of IRS examination and does not require you to meet with an auditor in person.

Although the IRS may have a question about your return without conducting a full-blown audit, audits may be conducted by mail. With a mail audit, the IRS will send you a notice or letter asking for additional documentation to prove various items you report on your tax return. Or, the IRS’s matching program may find missing income that you did not report on your return, such as income reported to the IRS by a third party on Form 1099-MISC. You may respond by mail or call the phone number on the notice to discuss or explain the matter. In some cases, submitting sufficient documentation will close the audit if the IRS is satisfied.

Pro tip 1: No matter what type of audit the IRS conducts, you will first get a notification by mail, never by phone or email.

Pro tip 2: Do not ignore the notice! Be sure to respond to the notice or to contact your tax professional, if you used one, with plenty of time to respond.

2  – In-person audits

An office audit or interview is an in-person audit that takes place at a regional IRS office. In-person audits are more in-depth than mail audits, and sometimes broader in scope. You will be asked to bring information to an in-person audit, including personal or business financial records, bank statements, and receipts.

3 – Field audits

A field audit, which is the most lengthy and complex type of audit, may be conducted at your home, place of business, or at your representative’s place of business.

What are possible audit outcomes?

There are several outcomes of an IRS audit.

1 – For mail and some in-person audits, if the IRS is satisfied with your explanations and the documentation you provide, then no change on your tax return is necessary.

2 – If the IRS proposes changes to your tax return, you can either agree and accept the changes or challenge the examiner’s assessment. If you agree, you will sign an examination report or other form provided by the IRS and establish some type of payment arrangement.

3 – If you disagree with the IRS’s findings, you can set up a conference with the examiner’s supervisor to further review your case or you can request a formal appeals conference.

Get help

Year-round, Block Advisors offers solutions to taxpayers who have received an IRS letter or audit notice, and who need help. We resolve a broad range of tax problems – from the simple to the complex, including audits, penalties, collection problems, and other tax account issues.

An experienced advisor:

  • Will help taxpayers file any missing returns, if necessary
  • May prevent or minimize additional tax assessments
  • May reduce or even eliminate any tax, penalties, and/or interest owed
  • Will obtain the best possible payment arrangements on any balance owed

Got an IRS notice that requires further action? Find your advisor match now.

Related Small Business Insights


Find a tax pro near you

Your team of local small business certified tax professionals is ready to help. Let’s get you there.