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No matter how simple the information request may appear to be, it is never advisable for a taxpayer to represent themselves in an IRS audit. Even if you have been absolutely honest and filed everything correctly, meeting with the IRS can be an intimidating experience. The IRS auditor represents the IRS, and is looking to find errors on your return, and in this regard it is best to have someone on your side to ensure that the IRS doesn't take advantage of you.

Nothing strikes fear in the hearts of people more than receiving an IRS audit letter in the mail. Audits generally take significant time away from your business and family, requiring you to gather mounds of records to substantiate each and every item reported on your tax return and often demand that you develop a comprehensive understanding of tax law to accomplish this purpose.

The IRS leaves no stone unturned in it's mission to determine the accuracy of your tax return. If you don't comply with the auditor's wishes, the IRS will recalculate your tax and send you home with a hefty tax bill as your parting gift.

Many taxpayers decide to handle a tax audit themselves and discover they may have been "penny wise", avoiding a representative's fee, but "pound foolish", because they received a substantial bill for a significant tax deficiency.

The IRS auditors are trained to extract more information from you than you have a legal obligation to provide. IRS auditors know that most people fear them and are unaware of their rights. As a result, the auditor knows they can use that fear and ignorance to their advantage.

At the initial stage, it is likely that only the civil side of the IRS is involved, not the criminal. You will be asked by the IRS to provide documentation about your income items and expense deductions. The IRS will ask obtrusive questions about your lifestyle habits, and often seek to review your bank statements to detect any signs of unreported income.


The Automated Underreporter Program generates CP2000 Notices advising of a discrepancy between amounts reported on an individual income tax return and data reported by filers of information returns, including all varieties of Forms W-2, 1099, 1098, and 5498. Before the IRS issues the CP2000, a Tax Examiner manually screens the cases, trying to reconcile gthe discrepancy. The IRS sends a notice only if the inconsistency is not clarified by that review. The IRS may propose change to income, deductions, or credits.

A response page is provided allowing the taxpayer to submit a statement explaining the reason for any disagreement with the proposed change and also to provide any supporting documentation for the IRS's consideration.


The correspondence audit issues are identified primarily through tax return entries that appear to be incorrect or to have a high liklihood for a tax adjustment. It is a separate program from the information-matching program that issues CP2000 notices (see AUR), although that program also is conducted primarily by mail.

Correspondence audits is conducted by a Correspondence Examination Technician or a Tax Examiner, and can usually be handled through the mail by submitting the requested receipts and/or documentation.

This type of audit is very efficient for the IRS and allows broad compliance coverage in that they require much less time to conduct than an audit done in a field by a Revenue Agent or Tax Compliance Officer.


An IRS office audit is performed by a Tax Examiner (normally a Tax Compliance Officer) who will request numerous documents and explanations of various income items and/or deductions. This type of audit normally requires you to produce all bank records for a period of time for a complete review of your cash flow.

An IRS Tax Compliance Officer meets with the taxpayer or representative in a local IRS office during an office audit. The return issues are likely to be more complex than those involved in correspondence audits. Documentation to be reviewed is taken to the IRS, and a face-to-face interview is available and sometimes required. Office audits targets primarily individual income tax returns, but they often include buisness schedules.


Field audits involve businesses that may have a complex set of books and records to be analyzed or reviewed. A primary element of this type of audit is a face-to-face interview that allows the agent to understand the nature of the business and the items of income and deductions that are shown on the return. Revenue Agents generally conduct field audits at the taxpayer's residence, place of business, or location of the books and records. If an agent agrees to meet at the representative's office, a tour of the business site is still required.


Most audit results can be appealed if the taxpayer does not agree with the results and believes that a sufficient argument exists to contest the decision.

Please refer to the "Audit Appeals" section for more information.

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BA Tax Service
Tel: (918) 258-0009
Fax: (918) 251-6995
505 North Aspen Avenue
Broken Arrow, OK 74012
Smith Tax & Accounting, Inc. All rights reserved.

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