If you’ve received a notification that you are being audited by the IRS, you may feel overwhelmed or like you’ve done something wrong. Before you panic, it’s important to know what is involved with an audit, what the next steps are, and how to tell if you are truly being audited or if you’ve received a fraudulent notice.

How to verify your notice

The most important first step is to verify that you’ve received a legitimate audit notification from the IRS to protect yourself and your information. Tax scams are prevalent, so it’s important to review the ways that the IRS will—and won’t—contact you. You can review the ways they will communicate with you here. Once you’ve determined that you're truly being audited, you will need to review what is involved in the audit process.

What exactly is an audit, anyway?

According to the IRS, an audit is "a review/examination of an organization's or individual's accounts and financial information to ensure information is being reported correctly, according to the tax laws, to verify the amount of tax reported is substantially correct."

It’s important to remember that an audit is not an arrest or a trial. Contrary to popular belief, an audit doesn't automatically mean that you’ve made a mistake. Yes, an inconsistency can trigger an audit if there's a discrepancy between what's on a tax form and what you actually reported, but the IRS may also choose to audit a taxpayer based on random selection or a statistical formula.  

Additionally, an audit may be less intrusive than you feared. For example, it may be entirely through the mail, although in some cases it may be at an office, the taxpayer's home, or place of business. Plus, not all audits result in your owing money—some audits lead to no changes at all.

Who gets audited?

Both businesses and individuals may be audited, and while there may be some differences in how they are handled, one thing that virtually all audits have in common is access to records. The IRS will want to review your records to answer any questions like:

• Did you deduct business expenses?
• Did you make some substantial charitable contributions?
• Do you have receipts or electronic records to back up your claims?

What happens next?

There is no typical length of time for an IRS audit, but if you have your records handy and cooperate fully and quickly, you increase your chances it will be as brief and painless as possible. At the end, the IRS may determine that you owe more money. At this point, you can either pay it, or you can appeal.

The important thing to remember is that if you are being audited, you don't have to go it alone. If you receive a notification that you are being audited, we are here to help. Contact us for assistance working through the details and gathering the records you may need.

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