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The three types of tax audits

If you are like most taxpayers, you dread the thought of facing a tax audit. While tax audits are not usually as grave as they seem, they are intimidating nonetheless. The prospect of an IRS agent combing through your personal finances in search of an error is not something that anyone looks forward to eagerly.

One way to combat your nerves regarding an audit is to understand just what they comprise. There are three different types of tax audits, and all are a bit different. When you know more about each one, you will know what to expect in case you are audited.

1. Correspondence audits

Correspondence audits are the most common type of tax audit. During a correspondence audit, you will not have to meet your IRS auditor face to face. The two of you, along with your accountant, financial advisor or tax attorney, will correspond through the mail. In this audit, the IRS is looking for verification of your income, errors on your returns or omitted documentation.

2. Field audits

A field audit is probably the most intimate type of tax audit. An auditor will come to your place of business-- whether your home office, the office space that you rent or another place of business—to examine your space. They will examine whether the home-office-related deductions that you have claimed are valid. While they are there, they can also ask for other tax returns, financial records or other pertinent documents.

3. Office audits

In an office audit, you must go to an IRS office for an in-person interview. You will have to bring along any documents that your auditor requests, including previous tax returns, W-2 forms and 1099s. You may also want to bring supplementary documentation, just in case the audit requires it. When you go to your interview, you may go alone or you can bring a representative like an attorney or accountant.

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William T. Peckham
1104 Nueces Street, Suite 104
Austin, TX 78701
Phone: 512-487-7604
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