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What is an IRS correspondence audit?

Over the past decade or so the Internal Revenue Service has increased its reliance on correspondence audits and expects to continue to expand its use of these examinations. When many people think of an IRS tax audit, they likely conjure images in their minds of a stark office with ample desktop space for an examiner to lay out forms and receipts for review alongside a ten-key machine. While office audits and examinations in the field continue to occur, the IRS is increasingly using the mail to conduct audits.

The agency says that a decade ago, roughly 400,000 correspondence audits were conducted. In recent years, the agency has conducted more than 1 million audits using the mail. Examiners work in a campus setting and communicate via letters with the subject of the audit. Examiners may, during the process, request additional documentation.

The entire examination process can be drawn out over a period of time. The agency suggests that correspondence audits are generally focused on line-item issues and not an entire return. However, taxpayers may have difficulty understanding what documentation is needed to support an expense or deduction that is under investigation.

While correspondence examinations may reduce the costs of the audit process to the government, it does not necessarily follow that the result is less damaging to the taxpayer than what may follow an in-person audit at the office. Notably, taxpayers who receive an adverse outcome in a correspondence audit may appeal the finding. In any kind of audit, an IRS audits and appeals lawyer may provide guidance, advice and advocacy as needed to protect rights.

Source: IRS Video Portal, “Campus Correspondence Audit Process & Resolution,” Accessed Dec. 4, 2014 

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