Reasons for an Audit

• The IRS lists six reasons it selects returns for audit (see reference 1). Your return may be selected as a result of a computer score that indicates the potential for unreported income, or if information included on your W-2 or 1099 forms does not match your return.
  
  The IRS selects returns for audit if they suspect a taxpayer may be involved in abusive tax avoidance schemes or if the taxpayer has been involved in transactions linked to another taxpayer whose return has been selected for review. The IRS also selects the returns from many large corporations for review every year.
  
  Local IRS offices run compliance programs and select returns for inclusion in these projects.
  
  

Know Your Rights

• Taxpayers have five rights when working with the IRS. They are: professional and courteous treatment; privacy and confidentiality; an understanding of why the IRS has asked for information, how the IRS will use it, and what happens if the information is not supplied; the right to representation; and the right to appeal disagreements, both within the IRS and the court system.
  
  

Audit Methods

• The IRS may conduct an audit by mail or through an in-person interview. Interviews can be held at the IRS office, the taxpayer's home or place of business, or at an accountant's office. If the time proposed for an interview is not convenient, taxpayers can request that the meeting be rescheduled. At the meeting, the auditor will explain the reasons for proposed changes to your return and review your documentation. The taxpayer may accept or appeal the changes.
  
  

Help with an IRS Audit

• Do not ignore communications from the IRS. Generally, you will have 30 days to respond to the audit notice letter. Read it carefully to understand why the IRS has selected your return for audit, and gather the requested information. It may be possible to resolve questions by responding to the IRS in writing, explaining your situation and providing supporting documentation.
  
  If the auditor is not satisfied with your written reply, organize your paperwork before the interview. If documents are missing, call the provider for replacements immediately. This makes the auditor's job easier and reviewing documentation will refresh your memory before the meeting.
  
  Bring original documents and copies to the interview. If you are unable to make copies, do not leave your original documents with the auditor. Politely request that he make copies.
  
  Depending on the complexity of your return, consider hiring a tax professional for advice and interview assistance. You can find tax professionals through the Yellow Pages or on the Internet. Most offer a free initial consultation.
  
  Consider contacting the Taxpayer Advocate Service (TAS). TAS is an independent, confidential and free service offered by the IRS for taxpayers who have tried to resolve their tax issues through normal IRS channels or who are incurring significant costs due to professional tax representation. Your local TAS contact information is available in the phone book, on the Internet or by calling the TAS at (877) 777-4778.