IRS audit

IRS Audit Procedures

There are IRS audit procedures that the IRS follows whenever an IRS audit is in place. While the IRS accepts most tax returns as filed, the IRS sometimes need to inquire about certain tax returns. When a tax return is selected for an IRS tax examination, it means that taxpayer is being audited by the IRS. Most people think that being audited by the IRS means there will be more taxes and penalties to pay. This is not the case, there are plenty of cases where after the IRS audit, the IRS gives the person being audited a check to go home with.

Possible results or outcomes of an IRS audit
  • the taxpayer may owe more tax
  • no change to the tax returns
  • the taxpayer may have tax credits, deductions or exemptions he or she did not claim and the IRS then owes him or her some tax refunds
What is the IRS audit procedures for selecting a tax return to audit?

The IRS has a computerized procedure to select tax returns to audit. There are two main IRS audit procedures in selecting tax returns for the audit process. The first is that, the IRS uses computer programs to identify tax returns that may have incorrect amounts based on:

  • matching information on the tax returns to tax forms such as1099, W-2, or
  • the study of past audits, or
  • compliance issues

The second way a tax return could be selected for an IRS audit is if the IRS receives information from outside sources that indicate that a particular tax return may have incorrect amounts such as from newspapers, public records or individuals. If the IRS determines that the information or tips they get are accurate and reliable then the IRS audit procedures may begin.

There are different IRS audit procedures for different types of IRS audits such as by mail, by interview or by repeat examinations. There are also IRS procedures for appeals in case that the taxpayer being audited did not agree with the IRS audit personnel. Then there are IRS audit procedures for collections as well as refunds.

If you are seeking an innocent spouse relief, there are IRS procedures to follow which you can read about in the IRS publication 971 called Innocent Spouse Relief and tax form 8857.