IRS Audits are conducted in two ways:
🌟By Mail
🌟In-Person
If the audit is conducted by mail, the taxpayer will receive a notice from the IRS called CP 2000. A CP 2000 is a detailed letter stating the differences between what the tax return shows and what information the IRS has as well as the proposed changes. This letter will show any corrections the IRS made to the original return as well as the recalculation of the tax liability. The CP 2000 will explain what a taxpayer is to do if they agree or disagree with the proposal.
A taxpayer must respond to the IRS by the due date shown on the CP 2000 notice or else the IRS will consider the changes correct.
If the audit is conducted in person, the IRS will notify the taxpayer that their return has been selected for review. The taxpayer will also be told what information to have available.
The IRS generally conducts an audit where the books or records are located. However, the audit can be held at the taxpayer's home, place of business, an IRS office, or at the office of the taxpayer's accountant, enrolled agent or attorney.
A taxpayer may:
*Represent themselves
*Have someone accompany them to support their position or be a witness to the proceedings *Accompany someone who will represent the taxpayer (this person must be an accountant, enrolled again, attorney, enrolled actuary or the person who prepared the return and signed it as the preparer)
*Have their representative act for them not be present.
In the opening conference, the examiner will explain why the taxpayer was selected for audit and explain the audit plan.
This type of audit usually concludes with a closing conference. The taxpayer will receive a letter from the IRS explaining if the return is accepted as filed or not accepted as filed. The IRS will explain any proposed changes if it is not accepted. If the taxpayer does not agree with the changes, they may appeal.
It is important that taxpayers open and read letters that are received from the IRS. Ignoring the letters will not make the problem go away, it will actually make the issue worse.
Candace Stevens, CEO/President of
Number Cruncher LLC
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