Know More About The Types of Business Audits

The IRS has several ways of auditing tax returns, depending on the severity of the business audit. However, there are two primary types of IRS audits: correspondence and field audits situs judi online. Here are the differences between them.

Correspondence audits
A correspondence audit is the most common type of IRS audit and is generally viewed as being easier to manage than a field audit. A correspondence audit occurs when the IRS identifies possible errors in your tax return and sends you a letter describing each error in detail. These audits can be corrected or explained away by sending the IRS additional documentation.

“The easiest to deal with are the correspondence audits, where the IRS is looking for limited information, or clarification on a specific area of the tax return,” said Greco.

Field audits
The most thorough type of IRS audit is a field audit, where an IRS auditor will visit your place of business in person. In this case, the examiner will go through your financial records and compare them against your return to see if the records line up.

“These types of audits should be handled with care, because one may inadvertently provide the IRS with information that may hurt the outcome of the audit,” Greco said.

Greco recommends conducting field audits at your CPA’s office so they can act as a buffer.