What Is a Field Tax Audit?

What Is a Field Tax Audit?

If you have received an IRS audit letter alerting you that your return is subject to a field tax audit, the experienced attorneys at Wiggam & Geer can help prepare you for this extensive review and represent you during the complicated and intrusive in-person examination.

A field audit is the most comprehensive of the three types of IRS examinations. This audit is usually performed at your home, place of business, or accountant’s office. The IRS audit period can take several days or even a week. The IRS will look at multiple, if not all, aspects of your return. Because of the complexity and intrusiveness of the field audit, it’s best to have legal representation who can guide and assist you throughout the process. 

What Are the Three Types of IRS Audits?

The IRS will always alert you of a field audit, or any other type of audit, with a notice or letter sent through the mail. The agency will not email or call you. If you receive a phone call, text, or email message notifying you that your return has been selected for a field audit, it is likely a scam and you should ignore it or contact the IRS directly for confirmation.

The audit letter will specify the date and time of your field audit appointment. It will also contain contact information for your examiner as well as details on requested documentation.

The three types of IRS audits are:

  • Correspondence audit – this audit is conducted via mail and usually only seeks verification of one facet of your return.
  • Office audit – for this audit, the agency requests you meet with an assigned examiner at a local IRS field office. Generally, an office audit also only looks at certain aspects of your return.
  • Field audit – while the most comprehensive, this is also the least common type of IRS audit. The field audit, performed by an IRS revenue agent in your space rather than at an IRS office, will take a close look at many items and possibly your entire return. It seeks to verify your return as well as the amount of tax you have paid.

What Triggers a Field Audit?

The IRS selects taxpayers for audit either randomly or because their tax return contained a red flag. Common red flags that can trigger an audit include, but are not limited to, high income, underreported income, taking the home-office deduction, use of cryptocurrency, deducting a large amount of business expenses, and operating a business with a lot of cash transactions. A taxpayer may also be selected for a field audit if they have had business dealings with another person or company that was found during an audit to have errors on or significant omissions from their tax return.

What Does a Field Auditor Do?

While your audit letter will specify documents to have ready for your audit, the auditor, or revenue agent, may ask for more at any time during the process. You can expect a field auditor to look at your bank statements, financial statements, and accounting records, and reconcile these to your return to ensure all information has been reported and there are no discrepancies.

The revenue agent will also interview you. The revenue agent may, for example, try to determine during the conversation if you are living a higher lifestyle than your reported income suggests and therefore might have unreported income.

What Do IRS Auditors Look for?

The revenue agents who conduct field audits are generally more educated and trained than other IRS examiners. At an entry level, revenue agents must have at least 30 semester hours of accounting coursework. Many are also CPAs.

Because they might be looking for information that could lead to underreported income or excessive deductions, it’s important to answer their questions as simply as possible and not offer up additional information. New data could lead to a field auditor expanding the scope of the field audit.

 

If you have been notified that your return is scheduled for a field audit, it’s best to act quickly and hire an experienced tax attorney as soon as possible. At Wiggam & Geer, our team of experienced tax lawyers can help you evaluate all your options and represent you. Give us a call today at (404) 609-1300 to  get started.

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