What is an IRS audit?
An IRS audit is a tax examination of a tax
account or tax accounts by IRS tax officers or
persons appointed for the purposes of IRS audit. The IRS audit
officers compare the tax return being audited with the IRS tax
records, examine witnesses, and report the result of the IRS
audit to the IRS.
The purpose of an IRS audit
The purpose of the IRS audit is to
make sure that the tax payer correctly reported his
or her tax liability for the tax year in question. Under
Internal Revenue Code (IRC code) 7602, the IRS can audit any
tax payer' s books and records.
US tax system and the IRS
The US tax system is based on voluntary
compliance. Under the IRS tax system, voluntary
compliance means that each us tax payer must voluntarily
under the threat of criminal prosecution tell the truth about
his or her tax situation. The US voluntary tax system means
that each tax payer makes a self assessment of taxes owed when
he or she prepares and files a tax return.
The threat of an IRS audit
A tax payer is likely to comply with the
IRS tax laws on a voluntary basis and tax filing
requirements if there is a threat of an IRS audit in the back
of their minds. The IRS tax examination division or
the IRS audit division is responsible for conducting
the IRS tax audit of tax payers. The IRS examination
division selects tax returns for tax examination and then
conducts the actual tax examinations in the field or
in IRS offices.