Audits are not a welcomed entity in anyone’s eyes. So, if you’ve just received a notice informing you of an impending IRS audit and state audit, do not panic. In some cases, people or businesses are selected for an audit at random. In others, an IRS audit is triggered by issues with your tax return, either because something appears irregular or incorrect or people associated with you, such as your business partners, are being audited as well. This dreaded process if often filled with stress and fraught with mixed emotions, because it may result in you having to pay fines or back taxes if the IRS or state agents find discrepancies on your filed tax forms. The good news is that riding out an audit doesn’t have to be scary or intimidating, as long as you have professional tax accounting guidance and representation.
How Will You Be Informed of a Pending Audit?
Depending on the type of audit and the inconsistencies found in your taxes, you’ll either receive a certified letter or an official IRS agent will come knocking on your door. In most cases, a letter comes first. It will describe the type of audit that you’re facing (more on that below), as well as how the IRS will further contact you in order to obtain your records.