IRS audit

IRS audit

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.