If IRS is asking about questions on the tax returns that you made
, then they might audit it. If you are wondering that how IRS audit is done then this article will be very helpful to you.
Firstly, if the change in our income falls between 25% of the total amount then the IRS has got three years to audit if the tax return was filed on time. However, if the changes in income are more than 25% then this span gets stretched to six years. In case IRS people deem your returns fraudulent then there is absolutely no expiration of the audit.
Tax returns are usually chosen to be audited at random by the computer algorithms. Obviously, your chances of being audited are less but that doesn't mean that you resort to corrupt tax practices. The presence of the following factors considerably increases the likelihood of the tax return that will be audited.
Excessive expenses
A business which is operating at a loss for more than one year
Returns that are filed electronically
In case of any omitted data that is reported to the IRS from other sources
IRS basically uses three types of audit and these include office audit, IRS field audit and Correspondence audit. It is important to note that once the IRS starts the auditing, you have only a handful of options left with you. If you are not having the documentation with you then you may face some big trouble.It is important to note that once the IRS starts the auditing, you have only a handful of options left with you. If you are not having the documentation with you then you may face some big trouble.