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How long does an IRS audit take
The IRS audit is a comprehensive examination of your business’s financial records and tax returns as inspected by the Internal Revenue Service (IRS) to make sure that the information you provide is accurate, precise, and credible. Audits can be comprehensive, time-consuming, and complex. The duration of an audit depends upon multiple factors. Furthermore, this time also depends upon the complexity of your firm’s financial records, the category of the audit conducted for your firm, and the overall coordination of the involved organization in line with the IRS’s duties. In this piece of information, we find the different scenarios upon which an IRS audit’s duration depends. This includes the factors that affect the timeline of an IRS audit.
Type of IRS Audit and how long does an IRS audit take
The IRS is responsible for conducting audits in a variety of ways. These audits depend upon the IRS agent, and every type of audit process can take a different amount of time. That being said, there are three basic types of audits which can take different amounts of time:
- Field Audit
- Office audit
- Correspondence audit
Different types of IRS audits
Field Audit
A field audit is one of the most comprehensive and time-consuming types of audit. It is comprised of an IRS agent who inspects your financial records, and this audit is usually initiated at the place of business or your home. Field audits involve far more complicated and significantly detailed matters. These can be things like tax return fraud, necessary business costs, or large deficits that need more observance from IRS personnel.
- A field audit’s duration can comprise several months to an year. This further depends upon the specific case requirements and the responsiveness of the taxpayer.
- In terms of the process, the IRS auditor can visit the business owner’s home or the place of work to review the financial records. This includes bank records, receipts, invoices, and other documentation. You can also be prompted to give additional information about your specific financial obligations and proceedings.
- The complications of the audit and the type of documentation required impact the overall time needed to conclude the audit. This amount can be shortened if your financial records are managed and organized. This will make the process a lot more smooth and help tax professionals and auditors to come to a decision.
To conclude, field audits are the most comprehensive and require the most time to be completed.
Correspondence Audit
This is one of the most basic types of audits. It is usually required when the IRS comes across a minor inconsistency or needs additional information or documentation related to a specific query in your financial record, tax return, or other deductions, credits, or further tax requirements.
- This audit takes typically 2-3 months. The additional time can be according to the time taken by the taxpayer in responding to the IRS office’s requests for the requested information.
- In terms of the process, the IRS sends a notification by mail asking for documentation, and you are obliged to provide them with what they have asked. This audit doesn’t require an in-person meeting.
- The factors that affect the duration of a correspondence audit commonly involve your coordination in terms of providing the required documents. Therefore, delays in your response to the IRS can extend the process.
- Therefore, this is the most straightforward audit that can be concluded pretty quickly.
Office Audit
An office audit is considered more in-depth than a correspondence audit. For this audit type, the IRS requires that you meet in person at your nearest IRS department to submit your documents and clarify items mentioned on your tax return. These types of audits are often conducted when inconsistencies are observed in complex aspects of your return, like business deductions or self-employment income, which needs further clarification.
- In terms of the duration, an office audit usually requires 2-6 months. If the issues, however, do persist, then things can get more complex.
- For the process, you will be prompted to bring in the required documents, which can be the bank statements and verifying of income expenses. Furthermore, an IRS agent will enquire you about the related inconsistencies observed.
- Additionally, IRS employees can ask for more research if the inconsistencies persist, and this can take further time.
How long does a tax audit take
It depends as to how much complex your tax return is. For instance, for self employed individuals that have complicated business deductions or rental property owners, people with multiple sources of income, the tax audit notice can take significantly longer periods of time.
For financial records that are incomplete or not managed properly, the IRS requires more time to process and might require additional documents as well, which can extend the duration of the audit process.
Complying with the IRS for the information requested helps keep the process running swiftly.
IRS tax audit workload
The IRS workload at the time of your request can affect the audit process. If they are experiencing a higher volume of cases or there is a shortage of staff members, then it can take longer to process your duration of audit.
IRS audit triggers or disputes
For disagreements in terms of your tax liabilities or refund required with respect to IRS findings, the audits can be delayed until an agreement is reached.
Types of Audit Expectations
As discussed several times before, the IRS audit can depend upon your specific scenario; however, the following steps can be observed in every audit:
IRS usually notifies about an audit through their mailing system. In this you will be provided information about the type of audit that will be conducted and what documents are required.
You need to provided the requested documents. Make sure not to compromise in terms of accuracy and organization in this regard.
In some types of audits, you need to meet in person with the IRS auditors. You can be asked questions related to additional taxes, interest, etc. The audit can be concluded in this step if there are no issues found.
Now that the IRS has concluded the audit process, they require a final evaluation of the inconsistencies upon which irs will ask further questions and you have to answer those irs questions.
Complete an audit in time with the IRS.
If you’re having issues with these audits, consider taking assistance from third party professionals like accounting and bookkeeping firms who can represent you in these audits.
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