The IRS Tax Audit Process

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What is the Difference in the Types of Audits?

The Audit Process

A primary function of the IRS is to audit taxpayers’ tax returns. After service centers have checked the returns for accuracy, the returns are then sent to the district offices. This is where some returns are selected for audit. When a return is selected for examination, it is usually subject to an “office” audit or a “field” audit. In very few cases there is also a “correspondence” audit that is done by mail. This is normally done for the purpose of the IRS requesting receipts or additional information supporting certain deductions.

Office Audit

The office audit is conducted in an IRS office and is typically used for individual taxpayers with little or no business activities. In an office audit, the taxpayer takes his or her records to the district office where they are reviewed by an IRS agent. The taxpayer is simply required to substantiate deductions, credits, or income items that appear on his or her tax return.

Field Audit

In a field audit, the IRS agent reviews a taxpayer’s books and records at the taxpayer’s place of business or at the office of the taxpayer’s accountant. This type of audit is generally used when the accounting records are too extensive to take to the IRS office. Field audits are usually used for taxpayer’s with substantial trade or business activities. If a taxpayer can present a valid reason, he or she may have an office audit changed to a field audit.