The Internal Revenue Service performs more than ten thousand audits annually. Audits entail examining individual and/or business tax returns along with accompanying documents to verify the accuracy of reported information and ensure correct tax payment. Audits come in various forms, including in-person (office and field audits) and through mail (correspondence audits). In the case of a correspondence audit, the taxpayer will be notified via mail to provide additional details regarding specific items on the tax return like income, expenses, and itemized deductions.
The most common issues that the IRS investigates include business expenses claimed on schedule C, itemized deductions on schedule A, and underreported income. Typically, the IRS has a three-year window from the date of filing to assess additional taxes through an examination.