People in Texas may receive notification that the Internal Revenue Service is field auditing them. While a few exceptions exist, most field audits must occur within three years of a tax filing. Unlike other audits, these audits occur in person at a person’s home, business or tax professional’s office. The person conducting the audit, which can last from one to five days, often has specialized training. These revenue agents are often looking for tax fraud.
National Research Program audits
These tax returns are selected randomly so the IRS can learn how to do audits better. This program aims to be fair to all taxpayers and build the IRS’ third-party database so that they know what to look for when doing other audits.
Tax preparers strategies
Sometimes, the IRS conducts field audits on most customers of a particular tax preparer. While individuals and businesses will need to pay any money due, these audits aim to take action against tax preparers giving deals too good to be true.
Offshore accounts
Businesses and individuals who file a tax return showing that they have money in a foreign account have a higher chance of getting field audited. These audits are looking for mistakes under the Foreign Account Tax Compliant Act.
Abusive transactions
The IRS uses data it collects to try to spot people involved in tax shelter schemes. Usually, these individuals and entities have filed some form of Form 8886. The IRS has a dedicated office to scrutinize these forms to try to spot schemes.
Unreported and underreported income
People operating cash businesses or those with cryptocurrency may receive more tax audits because the IRS wants to ensure that the individual or entity has not tried to hide money without paying taxes.
While anyone can receive an in-person field audit from the IRS, statistics show that some people are more likely to be notified that a revenue agent is visiting them. The notification will contain the time of the meeting and what documents you will need.
