IRS Audit

If IRS has selected your income tax return for an audit and you are not sure about the obvious reason, it may possibly be the IRS computer simply selected your tax return for audit based on critical check points or may be just randomly. Whatever the reason could be, the IRS has sent you the notice for an audit. The receipt of notice from IRS for audit may be scary however, while it should be a matter of concern, it should not be a matter of panic. Most of the times the IRS may simply require some supporting documents for income or deductions. In any case, the IRS questions need to be answered satisfactorily.

IRS Audit Selection
Selecting a return for audit does not always suggest that an error has been made. Returns are selected using a variety of methods, including:
• Random selection and computer screening – sometimes returns are selected based solely on a statistical formula.
• Document matching – when payor records, such as Forms W-2 or Form 1099, don’t match the information reported.
• Related examinations – returns may be selected for audit when they involve issues or transactions with other taxpayers, such as business partners or investors, whose returns were selected for audit.
Audit Methods
An audit may be conducted by mail or through an in-person interview and review of the taxpayer’s records. The interview may be at an IRS office (office audit) or at the taxpayer’s home, place of business, or accountant’s office (field audit). The IRS will tell you what records are needed. Audits can result in no changes or changes. Any proposed changes to your return will be explained.
Audit Notification
Should your account be selected for audit, you will be notified in two ways:
• By mail, or
• By telephone
In the case of a telephone contact, the IRS will still send a letter confirming the audit. E-mail notification is not used by the IRS.
https://www.irs.gov/uac/About-Publication-556