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Taxpayers call it an “audit”.  The Internal Revenue Service refers to it as an “examination”.  No matter what the name, the meaning is the same – your financial records are about to be scrutinized by the Internal Revenue Service.  Simultaneously, it is the start of your turmoil, not only financially but also emotionally.

How will you know that you are being selected for an audit by the Internal Revenue Service?  The audit process is usually begun by the Internal Revenue Service 1 year to 2 years after you have filed your income taxes.   The Internal Revenue Service will send a Notification of Audit to your last known address. If you did not receive any IRS audit notice, you’ve probably escaped the process for the most part.

However, the Audit can be requested several years after your filing date if the following exceptions apply:

  • At least 25% of your gross income was omitted on your tax return, resulting in a lesser amount of income tax being paid to the Internal Revenue Service.  The IRS has six years from the date of filing to pursue “examination”.
  • You have not filed tax returns as required.  The IRS has up to ten years to request audit, and in some circumstances, there is no time limit
  • There is no limitation for Audit if the IRS detects, and can prove, fraud in reporting.  The Internal Revenue Service can file tax fraud against you, especially if it was your intention to deceive the Internal Revenue Service regarding the amount of income tax owed.  However, if error(s) occurred and were not willful intent to deceive the Internal Revenue Service, it is not a crime.  It is the responsibility of the Internal Revenue Service to prove otherwise.

Once you receive the letter from the Internal Revenue Service, the audit is already underway leaving insufficient time for you to rectify the financial mistakes on your reporting.  The audit process can seldom be stopped; however, you can slow down the Internal Revenue Service audit by requesting that your file be transferred to another city/state IRS district.  Slowing the process down will give you time to get the advice of an IRS lawyer on what to do and how to organize all the documents that you need to present during an audit.

Security Tip:  The Internal Revenue Service will never inform you of an audit through a telephone call or an e-mail message.  The IRS always sends the Notification of Audit by Registered mail.  Be wary of any other type of IRS audit notice and do not offer personal information. These can be scams attempting to get money by scaring you.

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