Tax Preparation Compliance and Audit Risk
Tax Preparation Compliance and Audit Risk. IRS aims to balance the burden on the taxpayer with the potential benefit of the compliance effort.
Tax Examiners
An IRS Tax audits is a review/examination of an organization’s or individual’s accounts and financial information to ensure information is reported correctly according to the tax laws and to verify the reported amount of tax is correct.
Why am I being selected for Tax audits?Selection for Tax audits does not always suggest there’s a problem. The IRS uses several different methods:Random selection and computer screening – sometimes returns are selected based solely on a statistical formula. We compare your tax return against “norms” for similar returns. We develop these “norms” from Tax audits of a statistically valid random sample of returns, as part of the National Research Program the IRS conducts. The IRS uses this program to update return selection information.Related examinations – we may select your returns when they involve issues or transactions with other taxpayers, such as business partners or investors, whose returns were selected for Tax audits.Next, an experienced Tax audits or reviews the return. They may accept it; or if the Tax audits or notes something questionable, they will identify the items noted and forward the return for assignment to an examining group.Should your account be selected for Tax audits, we will notify you by mail. We won’t initiate Tax audits by telephone.The IRS will provide you with a written request for the specific documents we want to see. Here’s a listing of records the IRS may request.The IRS accepts some electronic records that are produced by tax software. The IRS may request those in lieu of or in addition to other types of records. Contact your Tax audits or to determine what we can accept.The law requires you to keep all records you used to prepare your tax return – for at least three years from the date the tax return was filed.