You may have heard about a tax audit and what it involves, but do you know if you yourself may be at risk for one? Many people do not know the basics of what the IRS looks for when conducting an audit, or why and how it selects certain taxpayers for audits.
When you learn more about the IRS audit system, you can also take steps to proactively ensure the IRS does not target you for an audit. While you may not able to avoid an audit entirely, by putting certain practices into place in terms of your tax filing, you can set yourself on a path to ensure you do not unintentionally commit tax fraud.
How the IRS selects taxpayers for audits
The IRS may select you for an audit even if it does not necessarily suspect you of tax fraud. The IRS uses various ways to select taxpayers for audits. Sometimes, it selects a taxpayer because the IRS system flags accounts randomly for examination. In other cases, your return may figure in the audit of another taxpayer with whom you have had financial interactions in the past.
Essentially, a tax audit is a review of your accounts and financial information to make sure the information you provided on your tax returns matches up with legal requirements. Tax law is a complicated branch of the legal system, and as such, it often requires the assistance of an experienced tax attorney. This is because as a taxpayer, you have certain rights you should seek to exercise and protect throughout the audit process.
When you need an attorney for an audit
If the IRS selects you for an audit, you may wonder if you need to get a tax attorney to help you with the process. While each individual audit is a case unto itself, the truth of the matter is that without a tax attorney, the IRS may make decisions in its best interests because you do not have an adequate amount of knowledge about tax law to defend yourself.
Tax law and audits can become complicated and overwhelming. You are at a distinct disadvantage if you do not have a professional background in tax law. Most taxpayers are not prepared for the requirements of an audit. A tax attorney can help you face an audit with accuracy and efficiency.