The purpose of an IRS audit is to provide some assurance that taxpayers
will file accurate income tax returns. Otherwise, many people could easily
take advantage of that situation if they knew they could file a return
and no one would ever look at it and check the work.
Should I Be Frightened If I’m Selected for an Audit?
Not necessarily. It doesn’t mean that the IRS thinks you did anything
wrong, it’s just that over the years the IRS has determined that
certain features of tax returns might indicate a higher risk of potential
problem. For example, if you have a sole proprietorship you’re more
likely to be audited. If you take a home office deduction on your tax
return, you’re more likely to be audited.
Do People Generally Get Penalized and Pay Extra After an Audit or Do They
Come Out Okay?
Often you come out okay. Occasionally, you may even come out ahead. Admittedly,
that’s rare, but it does happen. What they call a no-change audit
is where the auditor goes over whatever the auditor wants to go over and
decides, “Well, we’ll just accept the return as it was filed
or with no chan.
Are Auditors Incentivized to Find Problems?
If you mean do they have a financial stake in the results of the audit,
the answer is no. But the auditor’s work is reviewed by their manager
who is an experienced auditor themselves.
Is The Perception that Auditors Are Out to Get People Accurate?
No, I don’t think that’s the case at all. But that’s
because I have been dealing with them on a daily basis for many years.
But I know people get scared. One of the things I do is to step in between
the auditor and the taxpayer so the taxpayer doesn’t have to live
with that fear.
I’m the one who deals with the IRS, but actually, the auditors that
I’ve worked with have almost, without exception, been reasonable,
at least with the IRS! There might be a few exceptions. They’re
not out to get anybody.
For more information on
Purpose of an IRS Audit, please call
(510) 444-4430 today to schedule a free initial consultation. Get the information and
legal answers you’re seeking.