The IRS then uses computers to match the income amounts on these forms with your return. How Does a Tax Audit Work?Įvery year, the IRS gets copies of tax forms, such as 1099s and W2s. This examination can also be used as a precursor to a criminal investigation when deciding if a person knowingly cheated on their taxes or defrauded the IRS. The purpose of an audit is to determine if the amount or other pertinent information on a tax return is accurate. The IRS usually performs a tax audit, but a state authority can also carry it out. What is a Tax Audit?Īn audit is simply a comprehensive examination and review of a person or business owner’s tax return. To stay compliant with the nation’s tax code and avoid the enduring process of a tax audit, here are several red flags you should look for.īelow, you can also find more information on how to navigate an IRS audit. In 2018, The IRS performed approximately 892,197 audits.ĭue to the IRS’s frightening reputation, an audit is treated with an immense sense of urgency and stress by both taxpayers and business owners.Īs such, both parties face a unique situation of avoiding an audit from the IRS at all costs.

The Internal Revenue Service (IRS) carries a strict reputation as the nation’s accumulator of taxpayer dollars and the chief enforcer of the United States’ tax code.