Things you Should Know About Various Types of Tax Audits

Are you worried about the notice you have received for the tax audit? Are you thinking about how long does an IRS audit takes? If this question is boggling your mind, then let’s discuss how much time will IRS audit would take. The time depends upon the kind of issues that are to be addressed, the type of documents required. Also, the examination department is conducting the audit. However, the period varies widely depending on the type of audit done. Also, it depends on every taxpayer’s situation. The time talked below are averages based on the experiences and may extend to more time or lesser time than being discussed. The present condition of COVID-19 is further responsible for the delay in the multiple state taxes Houston Tx.

How long does an IRS audit take?

Without any more delay, let’s discuss the different types of California state tax audit and how Long does an IRS audit take?

Correspondence audits

Correspondence audits are generally regarding the one or few itemized deductions on the tax return like retirement plan rollover, rental property deductions or, contributions, and, are done by service centers. They are simple and take less time in the process. These audits get done through emails, and therefore, they can take a little more time than you think. In these audits, the initial contact letter is sent to the taxpayer, giving him a time frame of 30 days to submit the required documentation. However, this time can further extend if the taxpayers need more time to arrange the documents. In a correspondence audit, the task is not assigned to a particular auditor therefore, it is not possible to track the current status of the auditor’s performance. After the email reaches the IRS, it will sit for another 30, 60, or 90 days before some auditor at the service center looks over it. If the documents submitted by taxpayers are appropriate as required, then no change letter will be issued by the auditor and, the case will be closed nearly in 30 days. But, in case the auditor does not find the documents submitted by the taxpayer adequate, then he will issue an audit report informing the taxpayer about the potential tax payments and also requests him for more documents to support deductions. The taxpayers are required to either submit their agreement on the audit report or provide additional documents. After the taxpayer provides the additional documents, then the mail will again sit for the next 30, 60, or 90 days before some auditor looks over it. In this way, a correspondence audit takes nearly five to six months to get completed and maybe even more than that.

Office examination

This audit is carried by IRS’s Tax Compliance Officer (TCO) and is often thought of as an examination by the taxpayers. In this audit, the particular auditor conducts the process, and the name and contact no. of the auditor are revealed to the taxpayer so that he can get updated on the status of the process. It is better and less time-consuming than correspondence audits. The letter is sent to the taxpayer requesting to appear at the IRS office on a particular date and at a particular time accompanied by the required documents. The taxpayer can also get additional time to arrange the documents, but he cannot postpone more than one appointment. The IRS examiner will try to close the case in the first appointment, and can also arrange further appointments if the taxpayer does not provide sufficient information. Hence, office examination is the fastest way of an audit, and it gets closed in nearly 30 days from the date of the initial letter issued to the taxpayer.

Field examination

Field examinations are carried out by IRS agents. They visit the individual’s home or businesses to get the audit done. Since these examinations involve complex tax issues, one or two appointments are not enough to get the case closed. Hence, the taxpayers are not called to the IRS office. The audit may take a year or more to get completed.

Other examinations conducted by IFRS are employment tax audit, excise tax audit, or large businesses. They may take years and years to get closed.

Conclusion

The audit examination may be a nerve-racking experience for you. To save yourself from the stress of tax audit, you can always reach out to professional tax consultants who may help you fill your tax returns timely and accurately.