The idea of going through a tax audit may send your mind into a tailspin. And understandably so. The good news? Tax audits aren’t always necessarily a bad thing. And when they do happen in less-than-stellar situations, understanding your rights can help you to navigate them with confidence. Here is a rundown on the four types of tax audits, based on audit defense reviews, and what you should do if you face one.
The first type of audit is the correspondence audit, which shouldn’t cause you too much alarm if you have the documents required to substantiate the items reported on your tax return. With this type of audit, the Internal Revenue Service simply wants to verify your tax return’s details or accuracy, so it will ask you for more information. Meanwhile, the second type of audit is the office audit. In this situation, you will be interviewed by an IRS agent in person.
The third type of tax audit is the field audit, where the IRS will visit your business or home and request to see items related to your tax return. The field audit usually causes the most concern. Finally, the fourth type of audit is the random audit, where the IRS will simply review your return to ensure that you entered information in it properly, according to tax audit reviews.
No matter which type of audit you’re facing, it’s critical that you carefully read the letter that the IRS sends to you. Then, you can start gathering information about the matter that your audit involves. Remember that as you go through the audit process, you have the right to be treated courteously and professionally by the IRS. You also have the right to experience confidentiality and privacy when it comes to your tax matters.
In addition, it is within your rights to find out how the IRS plans to utilize the information it is asking for and the consequences of not providing the requested information. Finally, you have the right to be represented by an authorized representative during your tax audit.